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Mad Money w/ Jim Cramer
'Mad Money w/ Jim Cramer 7/31/24
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Look, when I was growing up, we'd always laugh when we heard WIMPI, a cartoon character associated with that bold sailor man, Popeye, who would always be willing to pay you Tuesday for a hamburger today. I mean, how desperate was WIMPI that he didn't have the money for hamburger? Now, all of a sudden, we have millions of WIMPI's in this country, in part because of higher prices, but also because the economy's wicking right in front of our eyes and the eyes of Fed Chief Jay Powell. When he spoke today about how he may need to cut rates, perhaps as soon as September, he threw gasoline on a rally that was already roaring, downgating 99 points. That's a beat jumping 1.58 percent, but the Nasdaq pulled only 2.64 percent. A long-awaited rate cutting cycle may finally be upon us in not a moment too soon, because this is the quarter where we discovered that we have a lot of people that don't have the money for a hamburger in this country. It's the quarter where we learned that many things are way too expensive, and it's mighty hard to pay for them because of interest rate costs. They are two owners. And I think that's why the Fed really laid the groundwork for rate cut when it issued a statement today. So the Fed knows that although job growth is moderated, inflation still hasn't maintained, but pay less to pivot because he can't allow the consumer to be priced out of places like McDonald's. Yes, you heard me, McDonald's. That once great bastion of cheap fast food. Remember, the consumers being priced out largely because of the Fed. We have higher interest rate charges, whether we're talking mortgages, credit card bills, car payments, and Powell can at least make them go back down even if he can't control the price of hamburgers. Hence the coming rate cuts because if it's already this hard for Wimpy to afford a burk, imagine what happens when unemployment starts really picking up. And the market can't wait for those rate cuts. It always moves ahead of them. By the way, hence the perfect run we saw, particularly in the beaten down tech sector leading the way. I think the Fed's willing to take action because the consumer is hurting far more than we might have expected even a few months ago. Right, at about this time, every quarter at the height of the early season, I like to look for themes of the ports we've got. So far, I've seen one overriding theme that dovetails with the Fed's thinking. It's how the consumers become tight-fisted, frugal, and mistrustful of most companies that have raised prices. Most companies are willing to admit that they raised prices too far. You roll back prices, you roll back your earnings forecast, you roll back your forecast. Guess what? Well, your stock goes lower. But this is the quarter where companies can't afford to not roll back prices without alienating customers. Money managers know which companies have raised prices too much. They aren't waiting for these companies to lower prices. They know the quarters can't be made. So they've taken down the stocks in advance of management's waking up to the consumer's new attitude. If you listen to McDonald's conference call from earlier in the week, you can tell what's going on in America. As Joe Arlinger, the president of McDonald's USA said, "Our restaurants in upstate New York have been running a local $5 meal deal that was highly successful, performing well with lower income customers and driving overall incremental sales." He goes on to say, "By leveraging learnings from within our system, we brought this to life for customers across the U.S. We've seen a lot of enthusiasm and the number of $5 meal deal sold are above expectations. Trial rates in the deal are highest among lower income consumers and sentiment towards the brand around value and affordability has begun to shift positively." Consider wimpy a piece. But also consider this something amazing has happened here. McDonald's, which was a go-to place for cheap food for decades, seemed to have lost the man all the affordability. Rather than being a value staple for those who can't afford to eat out elsewhere, Mickey D's has incredibly now become what Wall Street Elite calls the discretionary category. Something that's discretionary, something that's no longer essential, something you can do without, it's right up there with vacations, travels and hobbies. The fact that this happened, that McDonald's food got so expensive that it could be done without wasn't something anybody expected, but it's reality that many companies are now fretting about because 29% of the consumer discretionary companies have missed their quarters so far this earnings season. According to Robert Humm, our terrific CNBC markets producer, that's almost double the 16% average miss from recent quarters. That is incredible to me. Kudos to McDonald's for recognizing they had to come up with a cheaper alternative that Wimpy could afford. I wish other companies would follow suit. It is now beginning to dawn on other players that they may have a wimpy problem. Take Diaggio, the high-end liquor company, to me seems completely clueless. They make a terrific premium tequila brand called Costa Migos, yet a one at Clooney made all that money off of this brand have what Diaggio called extraordinary growth. But now get this. In the latest fiscal year, Costa Migos saw its organic net sales decline by 22%. I mean, that's breathtaking. It's insane. No, one of the Pennsylvania Lictor Control work, by the way, which is a terrific place to find prices for liquor, is now featuring a one liter Costa Migos bottle for $33.56 cut in half from the previous price of $67.13. Buy one, get one Clooney. Welcome to the wimpy world, Diaggio. No wonder one of the greatest parties he says is the six-dollar margarita in the month that Chili's is made with Lunazzo Blanco tequila, which is cheaper. Chili's is the world's largest seller of margaritas. Living proof that you can trade down from Costa Migos with no consequences, and America is doing that. Of course, some are fighting this, at least publicly, Starbucks reported last night. It's not a better-than-feared story, including positive commentary about how Starbucks rewards is giving you a good pairing menu with lower prices than you're used to. But not members? I don't know, the numbers are weak. I think Whitby's not impressed, so he may not want to become a rewards member. To me, that means Starbucks must do more to entice the dabbler to become the member. And without a cheap cup of gel, I don't think it's going to happen. This story's getting pervasive. Regular viewers know that I've been a great champion of the stock of Chipotle, and I love the food. Until the last few days, the stock's been flagging a bit, in part because we've finally found a price that people won't pay for its great meals. On its recent comp school, Jack Hart's Unincredible CFO talked about how the company raised prices in California by 100 base points. Listen to this, quote, "We normally don't see much resistance. We saw resistance to the point where we didn't get the 100 basis points at all." End quote. In other words, put through the price squeeze didn't work, didn't make me money. Chipotle, meat wimpy. Now, I know there are plenty of enterprises that are doing quite well, companies like NVIDIA, AMD, Amazon, Meta. There are other companies that are anticipating the rate cuts and buyers are getting ahead of them at Home Depot lows, the homebuilders, betting them mortgage rates could plummet. They will. The big question though, why is pal waiting to cut rates? Why not today? I mean, the consumer's spoken. Things are too expensive because people aren't doing well enough to afford to buy them, and interest rate charges are too high. The sellers aren't all willing or smart enough to come down in price. Sure, McDonald's realizes that there will be other companies following in their footsteps in the next few weeks, but the bottom line, the economy is getting worse not better. And if they're selling things that people can live without, then they'll gladly not pay you Tuesday because they can't afford the hamburger today or next week either. Let's take calls. Let's go to Dan and Washington, Dan. Oh, yeah, Jim, greetings from the Pacific Northwest where it's always green and most always raining. That's true. Okay. What's up? Well, about a year and a half ago, I took a pretty good position in a stock that it's steadily gone up and pays a dividend. And one with the infrastructure money coming in now and in the future, I'm wondering if this it'd be better to hold this stock, or have you been looking for something in a different sector that could perform better? And that stock is Caterpillar. Okay, Caterpillar's an amazing company. We made a killing on for the travel trust. It was really great. We left the stock. We probably left it too soon. I do believe I don't want to play the rush roulette with the quarter, but it's still an inexpensive stock. It does have a good yield. And I think you have a winner. I maybe take off a little and let the rest run. Let's go to Mark in Florida. Mark. Hey, Jim, how you doing? I've been listening to you since the radio days. Holy cow. Oh my God. That was such a long time ago. Wow. Real money. Real money on the radio. What's going on? My 18 year old son has a small clothing company. He uses Shopify. He just initiated a position this week. They're coming out with earnings on the 7th of August. What do you think about that spot? I think your kids got a horse sense. I like that stock very, very much. It's come down a lot. And I think it's a really, really good position to be able to take. Let's say to really be able to take advantage of what I think was some price, the clients that they put in that are now really starting to do much, much better for the company. They actually had to spend a little more money. And they didn't want to, but they had to. And it's really paying a lot. All right. Oh, man, money tonight. Do rates and reach go together? I'm taking a look at one formerly hated space to see it's finally time for you to return to the office. Office reset is then don't touch the dial. I'm going to run down the media stocks. I think our winners as we continue in an already heated election season. And there's a small, a mid-sized company that you're really going to like. And you will solutions has been around since the advent of electricity. But it's only at two quarters of public company. I have a post earnings exclusive with what turned out to be an incredibly hot stock. So stay with Cramer. Follow @chimcramer 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. Trading Ashwab is now powered by Ameritrade, bringing you an expanding library of education with Eden more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos and more, all curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. No sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn more at schwab.com/trading. Take your business further with the smart and flexible American Express Business Gold Card. It's packed with benefits to help unlock more value from your business purchases. 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Just go to indeed.com/madmoney right now and support this show by saying you heard about Indeed on this podcast, indeed.com/madmoney. Terms and conditions apply. Need to hire? You need Indeed. Three weeks ago, we got a cool June consumer price index report, and the whole market turned upside down, because with inflation receding, the Fed can now start cutting rates. Probably, in September, based on what we heard just today from Jay Powell. Suddenly, some of the biggest losers in the market became some of the biggest winners. These are companies that get hurt by hired restraints and, of course, will benefit from lower rates. Take one of the most prominent ones, the office real estate investment trusts, or REITs. Earlier this year, this was one of the worst groups in the entire market. Either the pandemic faded away. Many companies kept some type of remote or hybrid work set up, so they needed less office space. Throw in the Fed's rapid rate hikes on top of weaker demand, and the whole office REIT business model seemed to be falling apart. Of course, most of these stocks eventually bottomed the spring of last year. They've been working their way up, I've ever since. But to me, these moves felt a little like relief rallies, because the office REITs simply had gotten too low, even as the situation stopped deteriorating. The big rally over the past few weeks, though, is different, because this base from the presumption that office real estate is about to get a whole lot better. Something that very few people think, but it looks like happening from the stocks. We've heard from some of the office REITs this early season. I want to walk you through what's happening, because I think it's very different from what you're reading and hearing about. I want to start with a company called SL Green Realty. Now, this was a heavily shorted stock, and it's the largest office landlord in Manhattan. With this stock, it's up more than 16%, since we've got that cool that expected CPI reading on July 11. Big move. A week later, the company reporter is surprisingly impressive, reported with funds from operations. That's the key profitability metric for the REITs. Coming in at $2.05 per share, and I also want to look for $1.59, and that's up 45% for the year before 43. That's that kind of comparison people jump on. At the same time, SL Green raised its full year forecast, citing the outperformers of its real estate portfolio. And it's tourist attraction on top of one Vanderbilt. The new skyscraper right next to Grand Central Station Midtown Manhattan that I am embarrassed to admit that I've not gone to yet. In fact, much of SL Green's strength came from Midtown this time, and Midtown had been a wasteland we thought. CEO Mark Holiday was a fusiveness. He proudly asserted that those who rode off New York City were wrong. He laughed about the idea that financial sector was decamping for South Florida, noting that "growth in South Florida doesn't mean contraction here in New York." And he pointed to companies like Blackstone, Citadel, Wells Fargo, Bloomberg, and J.P. Morgan, which are all expanding their footprint in New York. In particular, Holiday said that Park Avenue in the entire east side of Midtown are quite strong at this point. Whether we're talking big leasing deals or small and medium sized ones, and that is a big surprise to many people. Overall, SL Green said it signed 38 Manhattan office leases covering more than 40,000 square feet in the quarter, bringing its total up to 98 Manhattan office leases through the first half of the year. The momentum clearly hasn't stopped because as of July 17th, that number already risen 105 leases with rents that are 12.8% higher than what they were getting previously. Where is this crash of office real estate? Meanwhile, there are Manhattan's same-store sales occupancy. It ticked up to nearly 90%. And they expect that to reach 91.5% by the end of the year. Wow. Clearly, SL Green is not just surviving. It is thriving. That said, the stock actually fell 1.4% in response to the quarter. But I'm not worried about that because after a couple of down days, SL Green's stock bounced right back. In fact, right now it's selling for less than nine times the midpoint of management's funds from operations forecast. And the company's paying you to wait for the upside. You get a 4.5% dividend. So it's definitely better than you would get from the tenure treasury at the moment. Hey, there's another big office reach that I think is kind of interesting that I've been following. It's called BXP. Now, you may not know that, but it's formerly known as Boston Properties until the rebrand last month. Now, this is more geographically diversified play. They got places in Boston, New York, Washington, D.C. and San Francisco into a lesser standard LA in Seattle. This stocks down rally 15% since the cooler expected is at CPR report earlier this month. This is where all the action is. And BXP backed up that move when it reported some solid numbers just last night. This was a clean top and bottom line beat, although not as impressive as what we get from SL Green. More important, when this cup reported in April, it had to cut its full year funds from operations guidance, because if that wasn't cutting it straight, it's quickly as they expected. This time, though, BXP raises funds from operations forecast, which is now higher at the midpoint than original forecast. So the release in January. Why? Okay, the portfolio is doing better and they see lower than projected non-cash interest expense, which is really great to hear. However, BXP also mentioned benefiting from, and I'm going to quote, this was not so good, higher termination income. And that's what the tenants pay when they decide to break the lease. Fortunately, BXP is seeing positive momentum with new releases versus the past quarters. While their total oxygen rate fell to 87.1%, not great. Imagine it says they're more focused on properties in central business districts, because that's where 88% of their rent-based comes from, and in central business districts, they've got a 90.4% occupancy rate, which is great. That fits with what we heard from SL Green while they're making a killing in midtown Manhattan. As for BXP, they said the strength this quarter came mostly from Boston and North Virginia, although Manhattan was solid, too. Their west coast markets are lagging. What BXP really needs going forward is a broader recovery for tech and life science, which would let their west coast properties bounce back. And tech management says there's some good leasing activity from AI startups, but not much else. And life science is not yet, but a lot of good. You get better IPO market, you're going to see good numbers. Now, BXP stock dipped almost 2% today, but again, I'm not going to sweat that. Remember, SL Green went down to report it two weeks ago before going right back into rally mode. That's often a pattern that you get when a stock's moved up too much anticipation of a quarter. BXP's cheap, too. It trades at just 10 times the midpoint of its funds from operations guidance, and the stock sports a really generous 5.5% yield. Once again, you're getting paid very well to wait for the turn. Well, you're from the next big office for NATO next Monday, but before that, I want to highlight one more encouraging time for this industry. I'm talking about the numbers from CBRE. That's the world's largest commercial real estate services and investment company. They do leasing property sales and outsource property management. With CBRE reported last Thursday, it delivered a big sales and earnings beat that sent the stock into overdrive. And if CBRE is doing much better, guess what? That says the very good things about the entire commercial real estate space. But here's the bottom line. After years of hindering about the office reads unexpectedly, the group's now doing just fine. And the stocks have started truly roaring after spending a year slowly running their way higher. Now we're seeing strongly seen activity that can justify these moves, especially with Raycuss in the horizon, which is why I bet that SOEAN and BXP think he's running. Coming up, it's mad money, not mad politics, but could the upcoming presidential election make legacy media stocks great again? Kramer's tuning in. Next! At EverNorth Health Services, we believe costs shouldn't get in the way of life-changing care. And we're doing everything in our power to make it possible. Behavioral health solutions that also keep your projections at their best, it's possible. Pharmacy benefits that benefit your bottom line? It's possible. 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After President Biden's deceitfully sub-optimal debate performance, that outcome seemed even more likely to the horrific assassination attempt on Trump. But on the 21st Biden dropped out of the race, Vice President Harris becoming the de facto Democratic nominee. And when you look at the polling, suddenly we've got a close race. Putting aside the polling, what really matters are the expectations. Because Wall Street is an expectations machine, right? Take this betting data from predicted a site where people can wage their own political events. In the days after the assassination tipped on Trump and during the Republican National Convention, betters were giving Trump victory odds as high as 69 percent. Harris' entry into the race has changed everything. According to the latest predicted data, it's down basically a dead heat. So what does a close presidential race mean for the stock market? Simple. And on how they can test the election, I think there's a big opportunity to make some money in shares of select media companies, which could make out like Bannison's Americans follow the race and both candidates spend fortunes on advertising. Take Fox Court, the parent company of Fox News, the preferred media channel of the GOP and the dominant cable news network. Back in April, I put Fox Court at the top of my media power rankings, but precisely because this is an election year and the stock's up 22 percent. Since then, dress the outperforming the other major media names, not to mention the SP500. There's no need to overthink this one, people. In this new, very challenging cable media landscape, where court cutting is still a big problem. The most durable property thinks it needs to be watched live. Mostly that means sports, but lucky for me, it's also news. Fox Court has a strong position in both that as extensive college and NFL rights with football season just around the quarter. And I bet Fox News will put plenty of viewers in the three months leading to the election, possibly for much longer than that, if there's also contested like last time. Now, Fox Court reports next week, and look, I expect a good quarter. Keep in mind that it's the second quarter, and my goal here is mainly about the second half of the year. Next up, the New York Times Company. Although, I actually feel better about this one in the event that Trump wins, even though the Trump just, then, the Times is like Trump, some people say, and Trump dislikes them right back. No, everyone says. When you're a media company with any kind of political angle, your business does better when your core readers hate the president of the United States. Hey, looks, same reason I think Fox probably performs better of Harrisman's. Look at the performance of the stock in the New York Times over the past eight years. This stock did nothing in the final years. The Obama administration actually fell 16% from the end of 2013 to the end of 2016. Then it soared during the Trump year from election day 2016 until Biden's inauguration in January 2021. The New York Times rallied 338% more than quadrupling what you would have made with the S&P 500 during that period. But since Biden took over, times up only 9%. Again, don't ever think this law. Merhade him. It was tough to take your eyes away from Washington when Trump was in power. He was a great driver of subscriptions for the New York Times. From 2016 to 2020, the company's subscriber base increased at a 42% compound annual growth rate, 42. In the first three years, the Biden administration has sold to an 11% compound annual growth rate. Not so hot. Of course, much of the recent growth has come from people lured in by New York Times's games like Wordo. That's the growth driver. Now, while actual reading of news is basically, if I do not bother my wife when she is playing World, the day never recovers if you do. There's nothing wrong with having a successful games franchise, but more engagement with the news would certainly be a positive for the business. And that's why I'm betting a close election helps as would a disputed election or maybe another Trump presidency. Finally, there's one media stock I am really excited about. I see it as a close, really big winner from a close election. And that's a company called Next Star Media Group. I've mentioned a couple of times already, but yeah, I probably haven't heard of it. That's because it's the largest local broadcast television play in the country, with 200 owned or partner stations, 116 markets, 220 million people they reach for them say. They also had a couple of national television properties, including the CW and News Nation, plus a portfolio of digital assets from its local TV station websites to the hill and newsnationnow.com. Collectically, they make Next Star a top 10 US digital news property. What's so great about local news? Look, as we get into the heart of election season, both major party presidential campaigns, all of the down ballot candidates and all of the super-sized political action committees that support them will be flooding the airwaves with political ads. Local TV is just a great way to target the spending, just yesterday the Harris campaign announced a $50 million ad buy ahead of the Democratic National Convention next month. While these are ad dollars, they're going to a lot of different destinations, much of them digital. A substantial part, big portion, will go to local media, like the TV stations on my Next Star. And Next Star is a small enough company that this influx of ad dollars has the potential to move the needle, especially because Next Star owns a whole lot of stations in the big battleground states that both campaigns are fighting over the poor of the money and cash. One big caveat, Next Star is more of a trade than an investment. While the stocks have been a solid long-term performance, almost 300 percent over the past decade, I'm really only interested in this one for the campaign spending thesis, because afterwards, some of the secular challenges for old-school TV will come right back into play. Look at it this way, Wall Street expects Next Star to deliver $5.55 billion in revenue this year and $25.36 per share in earnings, but the analysts see that falling to $5.12 billion in revenue next year, and merely $16.41 per share in earnings, my view. I think you can make hay while the Sun shines over Next Star this year, as the company could still surprise the upside for the next couple of quarters and the strength of much higher than expected political ad spending, now that we've got a genuine race on our hands. So here's the bottom line, as much as I really do loathe talking politics on the show, I think the suddenly close election gives you an opportunity to try to profit some of the media stocks that are about to be inundated with both viewers and political ad dollars in the campaign specifically allied Fox Court, then New York Times, and Next Star, though the latter only works as a trade, not as an investment. Boy, it should be a darn good trade. Jason in Florida, Jason. Hey, Jim, big up and a whole lot of respect from down here in Naples, Florida. Thanks for having me back. Oh, thank you, boss. I appreciate that. How can I help you? Hey, my question for you today, Jim, is what can we expect from Netflix this quarter? All right. So I thought the Netflix, but this is a tough one, Jason. I'll tell you why. I thought Netflix had a great quarter. I really did. I always write down what shows they recommend. They always have some really good ideas. They like all that British stuff lately, you know, on whatever's that. But I will tell you that the market didn't like it. And so I'm kind of not the colear. I thought it was a terrific quarter and I would stick with it, but the market didn't like it. So it's therefore was very confusing to me. I like that company very much. Let's go to Philip in North Carolina. Philip. Hi, Jim. How are you doing today? I had an okay day. Philip, I was a little busy. How about you? I'm doing okay. Uh, fair to Midland as they say down here. Fair to me. I see that up here too. And since I just finished watching the Yankees smack around the Soy's for three days, it makes me even feel even better. Yeah. Okay. So what's your stock? Because I'm going to tell you, I don't really like it. Okay. All right. Given the state with paramount, what is going on as far as the stock and, uh, I'll tell you the truth. Even though you said that and I stayed up late to watch last night's overtime, you know, the extra innings fiasco, that one's done. You got to sell that one. You got to ring the register. There was some bogus rumor today about something happened. You've made all the money you're going to make in P. A. R. A. Philip. So I would take the money and run. Anyway, I think this election season gives you an opportunity to try to profit from some media stocks as of now, Fox Corp. The New York Times and next are the ones that have my vote. There's much more man money, including my Swiss ability, UL Solutions. This is Safety Science Company. This is why I love the stock market. It just beat on its second quarter of earnings as a public company. I'm finding out if the stocks should be certified for your portfolio. This is the kind of stock, you know, a lot of, a lot of people don't know this company and they ought to. And then what's benefiting from the generator of AI? Boom. And it's now sinking. I don't know after tonight. Maybe it comes right back up. I'm going to give you my ROI on the companies that get business from AI. A lot of, a lot of abbreviations coming up. And all your calls are having fire tonight, since they're the lightning round. So stay with Kramer. We're seeing some real winners from the IPO Class of 2024. Techwoman, we really like UL Solutions as a global leader in Safety Science just came public back in April. This morning, the current imported second ever quarter is publicly traded entity. And the numbers were great. We're talking a big top and bottom line beat driven by app performance at all three other divisions. That's why the stock jumped with roughly 10% today. And at this point, it's up more than 80% since it came public. So is it too late to get in on this rocket ship or couldn't the stock have more room to run? Let's take a closer look at 10% and this is the president and CEO of UL Solutions. We'll learn more about the quarter and what comes to expert skin. And welcome back to Mad Money. Thanks, Jim. It's great to see you today. Well, you put up some amazing numbers and you have some very interesting categories that really, really did shine. They're kind of part of the megatrends that we're seeing. And I'd like you to talk about what's going on in batteries because that seems to be something that a lot of people talk about on Wall Street and you're integrally involved globally in the battery issue. We are absolutely involved globally in the battery opportunities. And those battery opportunities, of course, are in the mobility space with electric vehicles. But they're much broader than that. When you think about the industrial scale batteries that are needed to supplement all of the energy generation, transmission, and use. And so we're excited that we have announced the opening of our new North American Battery Lab in Auburn Hills, Michigan, in August. And I'll be the first to tell you, Jim, it's next Wednesday and we'd love to have you come out. I'm sorry that level of flexibility because my life would be a lot better than it is. But I think that also about them. What will we see if we go there? What you'll see is you practically have to build a bunker to test batteries. It takes a lot of concrete because we're going to try to blow these things up. Because to test products for safety, you have to do inherently unsafe things. So in addition to battery performance, there's a whole host of battery safety testing that we're doing in Auburn Hills, that we've been doing in China, that we're doing in Korea, and we continue to do all over the world. All right. So people are probably asking when they're listening, well, who pays? I mean, there's there's tests of players paid as GM pay. How about some of the Korean core companies? How does this process work? So the way it works is this, that we're involved in the early stages of innovation and R&D. And many times, innovation can take a long time. But as products are going through that new product development cycle, those manufacturers, those that you named, they all need to know that their products are going to pass the regulations and the standards in markets all over the world. And so we work with them to help them understand what's that level of certification they need, what types of tests come together. And then we put together a pricing package, and we perform that testing as part of their new product development process. So not all batteries are created equal, some are better than others? Not all batteries are created equal. And unfortunately, I think most consumers don't understand the inherent danger of lithium ion batteries, particularly if they have not been certified. And we saw this in the New York market earlier this year when the City of New York passed a law that said that any type of consumer e-mobility product, you know, bike scooters have to be certified to three UL standards in order to be least sold or used in the City of New York. And that type of legislation is happening all over the country because people have died from counterfeit batteries, overcharging, swapping out batteries that have been compromised. Not all batteries are created equal. And the newer ones that have, you know, just greater performance also can have greater safety challenges. I wanted to get to HVAC, but I'm intrigued by this. So in other words, you could have a battery in a car that the government allows, but you're the only, you're the one of defense because the government isn't as focused? Well, no, it's not quite that simple. But the way it works is you could have a standard that the legitimate manufacturers around the world will adhere to, but there is a problem of potential counterfeiting or a problem of someone breaching, you know, let's say the enclosure of that battery or overcharging it with a non-certified charger. And our parent company, UL standards and engagement, a not-for-profit has written standards around the safe use of lithium-ion batteries. And we, and others in our industry, tests to that safe use. So we're not performing a government function per se. We're performing a safety function on behalf of manufacturers and consumers. Got it. Okay. And HVAC, a big area we have trained on and we have carrier on. These are companies that are very much involved with the environment and trying to clean their products up so they don't impact the environment. You're testing for what angles you're testing for. Well, the big concern there is there are a number of new coolants that are much more sustainable, much better for the environment, but they're much more flammable. So you have to think differently about the science and the ways in which that those customers of ours who you just mentioned engineer their products and then the ways in which those products are manufactured and used by consumers. So we have seen a big uptick in what's known as GWP and we're excited about the use of those products safely in the HVAC industry. Well, I've got to tell you, I find your industry fascinating because one of, but first of all, people don't even realize that I might be more dangerous. And second, the idea of what the HVAC companies are doing and whether they're dangerous is really important and we don't think of it like that. We just think of earnings per share. So I'm really thrilled you came on this show and explained that and I want to congratulate you on really some incredible numbers and what to me seems like an annuity stream. This is not one and done. You've got some very long-term customers, don't you? This is not one and done, Jim. 42% of our revenue is recurring revenue through ongoing certification services, those factory inspections that we do all over the world where products are manufactured. And also, remember, 10% of our business comes from software and software as a service is a recurring revenue that we offer to our customers as well, helping them manage the transparency of their supply chains as well as sustainability needs. Well, thank you so much for explaining that to us, Jennifer Scallon's president and CEO of UL Solutions. Great to see you. Thank you for coming on the show. Great to see you, Jim. Thank you. And may have money speck in front of you. Coming up, pop open those umbrellas and tee up your toughest questions. Kramer takes on all comers in the lightning round. Next. It is time! It's up to the white on two-thirds round. First one of the numbers, up with your appliances. And then the lightning round is over. Are you ready, skink guys? Over the light round cramps with Austin and Oklahoma Austin. Jimi, how are you, sir? I am good. How are you? Man, I've got an open point. Another day in paradise. All right. Good for you. Okay, so this company I'm calling about has been down about 10% this month. It was up around 5% today alone. I feel like they have a lot of potential in growth. I'm just not sure if it's the time to buy. I'm talking about VRT. Okay, I like very much. It's very good. I do prefer because it was down today that you buy the stock. I'm Dover, D-O-V, which has a lot more than just data center going for it. It's not as concentrated. Let's go to Bill. In Massachusetts, Bill. Hey, Jim. Oh, yeah. Oh, yeah, Bill. Jim, can I just say one thing about gaming the club? The club sets us up the success. You told us early in June about the rotation, the expansion, then we even told us about detecting shoulder. Thank you. Thank you. You have to be a Harvard man. That's all I can. That's all I can do. I appreciate that. Thank you very much. Jim, what you taught me, I looked at the company, sir, but revised, and what you taught me was that they don't make money now. So with right this point in the economy, it's not a good time to buy that company. Correct, correct. Would you tell me what you think would serve the robotics? Okay. Well, I mean, there's a gigantic secondary coming on. A lot of insiders stop going, and I don't like that. I don't like to see that because the company is losing a lot of money, so I don't want to be there. But thanks for the kind words. Jason in New Jersey, Jason. We are Jim from Auburn, New Jersey. How are you? One of my favorite areas, one of many favorite areas in New Jersey. What's going on? Awesome. Nothing much. First of all, thanks for all you and Steph too for us with the investment club. Really love it. Thank you. Yeah, William, Jeff Marks, and we're doing it just best to begin. How can he help? Okay. Paying one of my ability of the day, so I just like to look up the company. They appear to have a good earnings, and they pay a really nice dividend. What are you thoughts on? DMO. Oh, back up to back, my choice. Very, very good back. You know, I never understood why it's priced so cheaply, but we just tended not value correctly. That would be a buyer right here. Let's go to Russell in New York, Russell. Yes. Hi, how are you? Booyah, Jim. Booyah, what's going on? Okay. So my question is, do I sell to you? I got to get to buy myself. I mean, this thing has fallen. It looks like a two for one split. I mean, holy cow, no, I hear about this too much Celsius. We're going to get to the bottom of it and then we'll come back. Let's go to Craig, Imazori Craig. Booyah, Jim. My best talk I have is AMD ticker symbol. Alpen, Mike, just go buy some. I wish I had been able to buy some today. I'm restricted for my travel trust. Can't do it. Arun and Georgia, Arun. Yes, sir. From Tampa, Florida. How are you? Who won? I'm doing well. Booyah, how about it? What do you got? Great, great. I walked regularly, and I have learned a lot. My question is on carnival cruise. I have several thousand shares bought at an average of $18.62. I noticed the mid-term and long-term sentiment is strong and also the valuations and the quality from S&P is very high. So thank you. What was the start? Carnival. Look, I like, look, I taste it. I like royal Caribbean more and I like Viking more. Let's go to Dave in Illinois, Dave. Dr. Kramer, my mad gardening friend. How's your German chances? The German Johnsons, I ate them and I got to tell you, there's nothing like a German Johnson. Nothing. Really? They're a good sandwich, Dave. Really good to sandwich. A little bit of pepper game like a plum. Let's go on. Got it. Jim, this $14 billion Swiss company seems to be properly positioned to take advantage of the recent upsurge in PC demand. Logitech International has beaten earnings estimates in the last four quarters. Although it lags the S&P so far this year, Jim, your thoughts on L-O-G-I. I have to tell you, I agree with you, Dave. I think Hanukk is doing a really good job. Now, the one thing I would tell you is that we are, when I listen to what Microsoft had to say, they're not as excited about the PCs yet. So it couldn't be a Christmas play, not so much now. That's my thing, you know, but thank you for that one. Let's go to George in Massachusetts, George. Hi, Jim. Several months ago, I asked you about a stock that I own called Distra. The symbol is VFP. Back then, it was in the low 30s. You said you liked it. The stock is around 80 now. Should I hold on to it? Yeah, definitely. No, this is one of the winners of the year. I think you continue to win. And I've got to tell you, I'm talking about my chief scientist and also research director of Med Money, Ben Stoto. He and I marvel that this stock just has no quit in it. It has no quit. It's just a pass. Let's go back to him. Let's go to Mike and Alroy. Mike! Kramer, how are you? Good. You're like, I've got another 47 callers. So let's just handle this one right now. What do you got? Service now, buy, sell or hold. The lightning route is sponsored by Charles Schwab. Coming up in video leading the semi-stocks with a huge move higher today. What's driving all those gains and can they continue? Kramer computes the move. Next. Good evening, Mr. Kramer. Thank you. Thank you for everything you do. You've been such a wonderful source of information with your teachings. I have to say thank you for all your advice and saving us for myself. Your advice? Let me quit a job that I hated. I love you. Thank you for everything you do. Thanks for making this money. More importantly, thanks for keeping us from losing money. It's hard to analyze this whole gender of AI thing because it's not obvious what anybody's doing with it. That leads both money managers and home gamers to wonder if the whole thing's a bubble or maybe even a scam. I mean, if it doesn't cure cancer, put a man on the moon or allow us to have a foolproof self-driving car, then who the heck needs it? Maybe it's just a gigantic waste of money. Now, I think that's very wrong. But lately, we've had two jarring events that support the corrupted conclusion. The first, when a video stock rallied relentlessly for weeks after its last quarter, it seemed to be on a mission to become the largest company on the Earth. And it briefly did, passing Microsoft from the title for a big reversal day on June 20th, that we now know was the beginning of a correction. That was a clarion call that the stock had gotten too expensive. See, Nvidia had a brief fling with $3 trillion, but the market cap in the model just seemed to make no sense. The next thing you know, Nvidia had shed $800 billion in market capitalization. Hey, put that in context. There were only seven companies bigger than $800 billion. So that called into question whether the video was just another Cisco circa 2000, which had a similar pirouette on the way from being the market's biggest company to merely another beaten down tech play. The analogy has been stuck with us ever since. Second, we had this alphabet fiasco. That was when a well-meaning CEO Sundar Pichai was asked why the company spending so much on AI, a lot of it going to chips from Nvidia. He said, and I'm going to quote, "The risk of underinvesting is dramatically greater than the risk of overinvesting." Ah, sure, that's a great existential answer for anyone trying to justify spending too much. But it made you feel it. Maybe Alphabet's purely doing it out of fear. If that's the case, if it's out of fear rather than out of pursuing a return on investment, then the spending probably is not justified. We wanted to hear something more like what we got from Microsoft last night, which is that they basically can't live without these chips because they need the computing power that they give you to satisfy the clients. You see, they need the power. It's not like they're doing it out of fear. And that's something, by the way, Lisa Sue, the CEO of AMD, told me this morning when I talked to her on Squawk in the street. She's not building a ton of expensive chips, hoping that someone might want them or fear otherwise. She's doing it because that's exactly what the customers demand. With that raised on debt from both Microsoft and AMD, then Nvidia made me finally out of the doorhouse. Plus, when you consider its potential earnings for next year, you know that the stock now sells at the same price earnings multiple as Colgate, Procter, Gamble, Coca Cola. I mean, like, student Nvidia had the same valuation as the company that makes toothpaste or diapers or shampoo or sugar water. I think it serves to sell at a higher valuation. I don't know about you. Something I reiterate tonight when I saw how much meta platforms is going to spend with the company. Look, I totally understand why Nvidia's valuation rankled people at its highs. It's a semiconductor company with a huge product that can be used to enhance productivity, but it really works. It sells amorphous and climberical and real boring. It makes you think maybe it's a scam. Can anyone actually come up with a use case for artificial intelligence power by these insanely expensive chips? The answer, of course, is absolutely there are a ton of use cases, but none of them is consumer-oriented. They're enterprise-oriented. So you never know about them until less is part of your job. See, every enterprise has expensive employees, and many of them may be superfluous. So you can figure out how to replace them with Nvidia chips. There are other elements of your business that you might outsource that no longer need to be outsourced because of these chips, though others involve designing something that might have taken four hours to now come down to three. All of these things will make businesses more profitable, even if they don't sound exciting. And that's the return on investment. The fact that right now AI seems squishy can no longer be held against it. Not after AMD and Microsoft have explained that companies need this computing power so desperately. If they don't need the chips, if they don't need the computing power, as Satya Nadella, the CEO of Microsoft, pointed out last night, then why do customers keep reordering? Good enough reason for me to make no change to my view, even as Nvidia's stock tacked on 327 billion dollars of value today. I say you should own, not trade, Nvidia. Like I said, there's always more to talk about just for you right here at Mad Money. I'm Jim Kramer, cinema. 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. Walmart Plus members save on meeting up with friends. 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