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Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 5/13/24
At US Bank, when we say we're in it with you, we mean it. Not just for the good stuff, the grand openings and celebrations, although those are pretty great. But for all the hard work it took to get there, the fine tuning of goals, the managing of cash and workflows and decision making, we're in to help you through all of it. Because together, we're proving day in and day out that there is nothing as powerful as the power of us. Visit usbank.com to get started today. Equal housing lender, member FDIC, copyright 2024, US Bank. Homes.com knows that when it comes to home shopping, it's never just about the house or condo. It's about the home. And what makes a home is more than just the house or property. It's the location and neighborhood. If you have kids, it's also schools, nearby parks and transportation options. That's why homes.com goes above and beyond to bring home shoppers the in-depth information they need to find the right home. And when I say in-depth, I am talking deep. Each listing features comprehensive information about the neighborhood complete with a video guide. They also have details about local schools with test scores, state rankings and student-to-teacher ratio. They even have an agent directory with the sales history of each agent. So when it comes to finding a home, not just a house, this is everything you need to know, all in one place. Homes.com, we've done your homework. My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a more market somewhere and I promise to help you find it. Man Money Starts Now. Hey, I'm Kramer. Welcome to Man Money. Welcome to Kramer America. I'll be able to make friends. I'm just trying to make a little money. My job is not to entertain, but to explain. So call me at 1-800-743-7C. Tweet me at you, Kramer. We're in a weird moment where stocks could be hostage to the Fed in inflation. But maybe they'll be free by the stealth forces of technology. We're worried about it, we're inflation or that about it. But we're hopeful about how artificial intelligence can bring all costs down. We don't like housing prices staying stubbornly high. But we see how Amazon can bring down the prices of drugs and groceries. That's how I've come to view this market during week where we get the producer price index, tomorrow's game, and the CPI Wednesday. Today we're pretty sure they've got Dow tipping 81 points. It doesn't be the cutting point of 2%. Now it's actually a bad seed point, 2-0 percent. We did break the Dow's eight-day winning streak though. The last down day was April 30th and that's pretty darn amazing. Of course, we don't want to look at this moment as a dichotomy. We want so much to say sure the drug prices have come down, haven't come down all that much. But have you looked at Bio-Hive 2, a new AI supercomputer powered by Nvidia hardware, to speed the work of scientists in healthcare, which was introduced today. Have you seen what recursion, the Nvidia-backed drug developer that we had on Friday, is going to do with it? Maybe they can use this machine to speed up discovery in the development time. Remember every second counts when you're on the patent protection clock for a drug. You can only imagine how many hard-dictual illnesses can now be beaten because we have the ability to analyze data so much faster. Years to months, months to days, days to hours. It's a game changer no matter what. Op, don't get too carried away with that near-term. It's not a deflationary hope. It just isn't. See, you can't. You can't get carried away because rents are far more important for the CPI than it seems. Drug prices years out. Rents won't come down in price. Perhaps that's because we have high immigration with maybe 500,000 people of work visas and the rest house by state and local governments where everything can find space. We don't know how many work permits have even been given, but obviously more people means more demand for housing. On the other hand, immigration is one of the things that keeping down wage inflation, but that's not something consumers need to care about. But wait, before you get too negative. Wait one second. Have you played with chat GPT 4-0, the O standing for Omni? It has amazing capabilities and text, video and audio. It can perceive your emotions. It can read bedtime stories with feelings. Be more dramatic, more musical. Yes, it can sing the story. It can translate with correct intonation. Not flat the way you'd expect from an AI bot. And it can even handle being interrupted. Come on, that's amazing. Oh, and by the way, two times faster, 50% cheaper. That's phenomenal. But how does that program that can sing a bedtime story build enough houses to push housing prices remain slower? Is there anything in the Amazon toolkit that can put up a house quickly? Can you get one from Prime via next day? How about same day? Sure, home builder contractors can coordinate the roof with the gutters and the society if everyone has an Apple vision pros building a house, but they don't. And they won't, because it's 3500 price tag. You want to Google a cheap house? It can't answer a query, but it can't build a new one or even remodel a low one. You can use it to learn how to do plumbing. Don't do electric. Unsafe. Meta can't build a house either. I mean, Meta can tell you what your friends are up to, but how does that keep inflation down? None of the hyperscalar titans, as rich and powerful as they are, can keep insurance rates from going higher. None of them can build more used cars. They can't help you find cheaper power, but that apparel is probably not included. Yes, they can do it, but they can't include the CPI. You know why? Because it comes from China. It's EMU. We keep thinking that accelerated computing and generative AI will solve so many of our problems. And eventually they will. But the emphasis is on eventually. In the near term, but won't have any impact on this stuff we're worried about that's front and center, not in a timeframe that matters to the Fed. Yeah, I had the remittances about that. It's kind of like when we started the street.com in 1995. We got money from this alpha called Starwave. It was founded by the late Paul Allen and left by this terrific guy Mike Slade. Slade came to see me a few years after we had started, and he described the video ads that will run on the website. Video ads that will pay for everything. I said video ads genius. When can we start? The answer was, well, how about a few years from now? And moment will be widely available. Who knows? You know what? We're getting a lot out. Who knows right now about the promise of generative AI? Who knows? So we tended to dismiss it. But if we could just get to the promised land, it could be like streaming video, huge game changer, which I get at possibilities. Right now at this moment, everything is one of the verge. But what's before the verge? Well, the answer is all sorts of inflationary numbers that may drive up interest rates, making us feel like it's too I see a moment to invest in stocks. It feels like that moment when Starwave visited the street.com. My response to the Starwave vision was great. That's great. How am I going to make it though until we get to those get to the promise land of video and get rid of these flat banner ads? We're going to be crushed by the first alpha that disintegrates the ad agencies that love us so much. But sure enough, we got a blitter is.com bubble burst, and Google took over the ad game, distributing every advertising from number one and dying campaigns. No. All the predictions we made about the internet during the period turned out to be true. But it took a decade, a decade longer than the visitors had hoped. Right now AI is promising in the same way. But we've got this near term inflation issue that we can't do anything about the cars, the insurers, the homes, the apparel, the rents. These are all working against us and could cause the bond market to behave badly, making the Fed in turn feel like it needs to leave rates higher for longer. And that will impact stocks. I don't care what you say. So let's bring this all together. I would love to believe that AI will produce amazing gains in productivity that will help bring down inflation and bring it that hard. It could make things cheaper. It could improve the consumer's balance sheet. But it can't bring down the cost of what's currently too high. If this were a Western film, instead of just a stock market, AI would be the cavalry. Stocks would be stuck in the fort. The fort can keep lots of bad actors out, help us go higher, but it can't create the goods that are in short supply. As long as rates are high, the homebuilders won't put up many new homes, even though demand is off the charts. Cars and trucks, they're all days by the fact that we're no longer going toward the electric vehicle future, but they expect it. So we can't ignore the near term and focus on recursion and its ability to reinvent drugs using Nvidia supercomputers. We can think about how great it is that a bedtime story can be sung by a computer, perhaps in a barot trunk, perhaps by someone selling a laser tailor's whip. But we can't get the inflation into seas that control the Fed's worldview under control, which is why you need to stick with the stocks of companies that aren't hostage industries, which means you have to be able to grow with stocks. Those do poorly when rates go higher. And you don't want to get hurt by slowing economy, like buying the stocks of goods directly connected to housing. Otherwise, you lose money. So here's the bottom line. We got this streaming video eventually, and I think we'll create drugs faster too. But the former took too long, and the latter, who knows? But it certainly won't be in time to save us from Wednesday's CPI report. Let's just hope it comes in cool, and it doesn't matter. Miles and Louisiana, Miles. Hey, Jim, have a small position in Visa and was looking to add to it. Is this a good level? And should we be concerned about rising credit card debt? No, no, no, no, no, because it's really, that would be a bank would be worried about the credit card debt, not Visa. People just be issuing more and more cards. I think Visa, this is a fabulous level to get in. But you're down 11 from a time, but that's about all you ever seem to get when it comes to Visa. I would be a buyer. Tom in New York, Tom. Hello, Mr. Kramer. Thank you for taking my call. Of course, Tom, how can I help? Quickly, Jim, I've been investing for some time without a whole lot of success. Originally, I really became fed up with buying high and selling low. So I broke down and joined the investing club. Thank you. I like that. Thank you very much. I feel that you guys have gotten me pointed in the right direction. Me and Jeff and Zen. I'm a legal teammate. Jeff is just incredible in this stuff. Go ahead. Yes, you are. All of you. I'm learning to do my homework. Okay. But as a fledgling club member, I thought it was to check my homework with the teacher. Sure. Jim, I have a small position in one of your Kramer saves, and I wanted to know if it's too late to increase my position. And Eaton, even though he clarifies, is a little above my basis. Eaton is a great stock. It trades erratically. So that means that there are these moments where it goes down like four or five, and you get to buy it. You have to put in an order. For if it drops four or five, you can buy some for that day. Don't put it. It's good. You can't just, just that day. And then if it falls, even more than that, you can buy some more. But you gotta wait, because it's a crazy trader. So we gotta wait for the client. All right. We can get excited about all these AI innovations, right? But we still can't get near-term inflation or under control. So if you want to actually make money, you need to stick with the stocks and companies that aren't hostage, you need to be faced with a slant economy. Well, I'm mad by the time. Where do we stay on the gig economy stocks? Now that some of the key players have rallied off of their lows. I'm serving the likes of Uber and Instacartans sharing. If I think the momentum could continue, then we've been covering the constellation energy short for two years CEG. So with the stock rallying from 50 to over 200 today, it's the room to run. I'll give you my take. And the power of the buyback is real. I'm sharing a buyback link shot that might be worth adding to your shopping list. So stay with Kramer. Don't miss a second of Mad Money. Follow @chimcramer on X. Have a question? Tweet Kramer #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. You've almost certainly been prescribed a medication before. But did you understand how it worked? The way your medication works in your body shouldn't be a mystery. Learn how VivGuard Tytrullo, F-Guard Tigamod Alpha, and Hyaluronidase QVFC works by visiting vivguart.com/moa. That's v-y-v-g-a-r-t.com/moa. Brought to you by Argenics. When you're hiring, the best way to search for a candidate isn't to search at all. Don't search, match. With Indeed, Indeed is your matching and hiring platform with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates fast. 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But then the market cooled on growth stocks in March and April, and these gig economy names pulled back from their highs, pulled back dramatically, actually. All of a sudden, these companies had a lot to prove their first quarter reports, and now that we've heard from them, I want to give you an update on the gig economy, starting with the rideshare plays and then going over to the delivery services after the break. Keep in mind, two or a few years ago, none of these companies had really had to care about profitability. It wasn't in the cars. The whole industry was propped up by endless venture capital money, endless because the Fed kept interest rates so low for so long that it wasn't insanely cheap for these companies to borrow money. That all changed when the Fed started tightening in 2022, and the gig economy plays had to pivot to profitability. As a result, all of these services became a lot more expensive. So how are they handling the new world? Why don't we start with Uber Technologies, the number one player in rideshare, with 76% market share, and a heavy hitter in the meal delivery space, 23% market share, way behind DoorDash though. But much harder than anybody else. Out of the leisure of the CEO, Derek Lusciore, Uber's stock rallied from $20, and it slows to a couple of years ago, to about 80 at its highs in March, for pulling back to $66 today. The stock could soar like that because these guys figured out how to deliver profitable growth. When Uber reported in February, they delivered blowout numbers and followed that up a few days later by announcing a $7 billion buyback. Wow, versus in its company's history. Then, when those stocks went out of styles, they mentioned in March and April, the stock gave up a decent chunk of its gains, and everybody started worrying about the fundamentals. But the Fed owners, they tried to be fine. When Uber reported last Wednesday, I thought the results were mostly pretty good. Revenue beat, EBITDA beat, massive free cash flow beat, with the latter up 148% year for year. There were some issues though, starting with the fact that Uber's gross bookings missed, thanks to a shortfall in the ride-sharing business. Ooh, bread and butter. Plus, on the earnings front, well, they lost their usage. That was a surprise loss. Wall Street was looking for $0.22 profit. Now, I don't blame them though. CEO Derek Lusciore explained that the loss came primarily from a markdown for Uber's equity stakes in other companies, like the ride-sharing company in China. They had D&D Global. It had nothing to do with the core business, so it should have been ignored. Management's guidance for the current quarter was technically mixed though, but it certainly didn't help. Bad gross bookings, forecasts, in-line, EBITDA forecasts. That was not good. I think it was this softness in the gross bookies. It's not just a stock down 5.7% or so last Wednesday, because it seemed to confirm the consumer weakness fears that they've all been faster than Wall Street. You can hear about that all the time, right? How weak the consumer's gotten. On top of that, maybe people wanted to hear more about what Uber's got for autonomous driving. Even though they're always Tesla's been making about its robo-taxis, but customers started basically saying autonomous vehicles aren't happening anytime soon. Wow. Well, though, I got to tell you, even after that, I'm pretty sanguine about the prospects of Uber. The both thesis here is that the company's consistently growing profits and throwing off tons of new cash flow, even if there's some softness on the gross bookies front. In the end, I'm viewing this post-first quarter shakeout as an appropriate reset of expectations. Plus, even after Uber's pulled back to the '60s, the stock remains up more than 7% your day, and hey, this sell-off also gives management a chance to put that big buy back to work. You've got my blessing to buy it, because the company will be buying alongside you. I really like the stock here. As for Lyft, L-I-F-T, the underdog in ride sharing space, well, you know what, they had another solid quarter. Under newest CEO David Risher, when they reported last Tuesday, nighty, the night before we heard from Uber, and you remember David, he's been on the show a bunch of times. In fact, Uber's gross bookies miss loom so large, precisely as Lyft's gross bookies beat expectations. Looks like they're finally on a more competitive footing. Lyft's gross bookies growth match doobers in the first quarter, and Lyft's guidance for second quarter bookies implies they'll match Uber yet again. In the old days, Lyft seem to be steadily losing share to Uber. Now basically seems to be holding steady, which is an extremely positive development. And the good news is that they're defending their market share without compromising profitability. Lyft reported a modest EBITDA beat and surprisingly positive free cash flow for the second quarter in a row. Good guidance on the probability front for the car in quarter too. How are they doing it? Risher credited solid execution innovation on the platform for the much improved numbers. I like it. I think he's right. I notice I accept that as the main reason. As for his full-year forecast, Lyft mostly confirmed his previous outlook, except they raised their free cash flow guidance pretty substantially. That's exactly what you want to see. But the takeaway is that Lyft continued to make progress towards the goal of becoming a profitable growth story, which is what Risher's been aiming for since he took the reins about a year ago. The results were good enough to send this talk up 7.1% last Wednesday, though Lyft has given back some of that gain since then. I have been really impressed with what Risher's done in his first year of the job, and this talk definitely deserved to rally in response to the strong quarter, especially as it looks like Lyft has stemmed the share loss to Uber and done so without compromising profitability. I bet this talk can work higher as long as those narrative remains in place. In fact, as long as Risher continues to turn things around, I actually wouldn't be surprised if Lyft even became a takeover target, if the stock stays down here while the big turn comes. After all, it's the smallest of the major gig economy stocks with a sub-7 billion dollar market cap. So the bottom line for the two major ridesharing companies is that both reported solid quarters. Even if Lyft's was well received while Uber's was hated. Going forward, we have to keep an eye on whether Uber has an unaffordable problem, but for now, I'm not going to give up on this one just because of some gross bookie softness. Not when they're delivering so well in the profitability of free cash flow front. Lyft's more of a turnaround story, but turn around and it's going great. And if you want to know about the delivery side of the gig economy, why don't you stick around after the break because we tell you all about it. We have money's back. Coming up, Kramer continues his look at the gig economy. Where to invest in the new age of work. Next. Electricity. A big idea that's inspired countless new ones. From powering the light bulb to virtually powering our entire lives. 30 years ago, State Street launched the Spyder S&P 500 ETF, Spy. A big idea that inspired the world to invest differently. And still does. What can you do with Spy? Before investing, consider the funds, investment objectives, risks, charges, and expenses. Visit ssga.com for a perspective containing this and other information. Read it carefully before investing. Spy is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal apps, distributors, and distributors. To have a look around at the major gig economy place, now that they've all reported. Now, before the break, it was the ride sharing companies. Now, I want to talk about two major players from Food Delivery, DoorDash and Maple Bear, the parent company of Insta. Let's start with DoorDash because if it was the first of these companies to report, the Food Delivery Service Company delivered a solid quarter with seemingly grim guidance. That sent this stock down more than 10% the next day. The actual quarter was good, but the management guide up was slightly lower earnings before interest, taxes, depreciation, and amortization of the current quarter. Largely because they're making big investments in grocery and convenience store delivery while expanding overseas. Given all the handring we've heard about the flag and strength of consumer, I wanted to see if people were backing away from DoorDash's all these Food Delivery Services have become major sources of inflation. But I didn't see much evidence of demand slacking in the quarter and the guidance doesn't reflect that either. They're just making some big investments to order both to the company's growth in the second half of the year and beyond. I like that. But Wall Street simply wasn't willing to wait for these investments to pay off. Just like with Uber and Lyft, DoorDash had been able to rally over the past 18 months, but because the company had been pivoted to profitable growth, and I love that. Less spending or monetization of the existing business. So when people saw the new spending plans, they felt like maybe it was to step back in the old world direction. Personally, DoorDash's are the benefit of the doubt here, but at the very moment there's very little patience for a new investment cycle, which is what the company seemed to be telegraphing. Now, after the stock's initial 10% decline, it tried an amount of comeback. But then last Tuesday we learned that Uber and Instacart are teaming up to bring meal delivery to the Instacart app, basically a new portal for Uber Eats to bring in customers. While Uber Eats is a long way behind DoorDash and meal delivery market share, this obviously makes them more of a competitive threat, and that erases the stock's rebound. In the end, I got tremendous respect for DoorDash co-founder and CEO Tony Xu. And like I said, my gut instinct is that the company deserves the benefit of the doubt, as it spends more to grow the business. But the stock might be choppy until the company demonstrates the earnings improvements that have been promised for the second and half. I think DoorDash is worth your trust. Just don't expect it to earn the market's trust anytime soon. I'm out ahead of it. Next, let's look at the last report for the four major gig economy plays, the one that's most mystifying to me, the one which came from Instacart, parent maple bear. That's right. So, no, it's maple bear is the parent for Instacart, even though you probably never heard of maple bear. And this came Wednesday night. Now, this stock had made a huge move higher earlier in mid-February, thanks to a much better than expected quarter. On top of reporting strong numbers, the company announced the slew of efforts as part of a major pivot toward profitability and rewarding shareholders. That includes the departure of the company's CEO, a restructuring plan with a 7% cut to the workforce, and even a $500 million plan, an increase to the previously announced share repurchase authorization. That put the total buyback to a billion dollars. That's pretty big for a company that's valued at less than $10 billion. I really like that. Reading between the lines a bit, the sentiment seems to be this. As this chart shares fell from 42 and changed on the first day of trading, down to 22 and changed it through lows in early January, management realized the stock wasn't resonating with Wall Street. So, what did they do? They did what you do to get things going. They took some major steps to make the business look more like Uber or DoorDash, which have both been rallying since 2022, precisely because of their pivot to profitable growth, rather than growth at all costs, which is a loser. And that's what allowed this talk to work from February through its highs last month, although it never pulled back as much as the other gig economy names. I had to tell you, the plan worked because when Maybell Square reported last Wednesday, the quarter looked awfully similar to the one everybody loved back in February. Gross transaction value, higher than expected, order substantially higher than expected, rather than higher than expected, with accelerating growth and transaction volume and orders. Even better, Maybell Square's adjusted EBITDAG came in well ahead of the expectations again, and the company delivered another big surprise profit, making 43 cents of earnings per share with analysts from looking for two-cell loss. Better yet, management's guidance for the current quarter was on the high end for gross transaction volume and was flat out better than expected for EBITDAG. So, as you saw, in response, the stock opened higher last Thursday morning, as you would expect, right? But it eventually gave up those gains and then some, ending the day down 3.7% and then tell me another 3.1%. The house of pay. Oh, Friday. So, the stock's now back under $35, but from some perspective, Maybell Square's still up 48% year-to-day. Why did the stock react so negatively? Isn't this great? This is really a terrific conundrum to me. Now, I could try to parse every line of the quarter in the guidance. Honestly, the post IPO lock-up when insiders selling just ended in March, so you had to expect some profit taking here, no matter how good the numbers were, remember, up 40%. The real reason I hesitate the wholeheartedly recommending Square's Parent Company is that I'm just not sure how the grocery delivery space is going to work out in the long run. Sure, they paired up with Uber to offer their own meal delivery service, but they need to do that because three weeks ago, Amazon announced a new low-cost grocery delivery subscription for prime customers. Nearly seven years after Amazon announced its acquisition of Whole Foods, it still really hasn't nailed down grocery delivery. This is just their latest attempt, but I don't think they'll ever truly stop trying. And in the end, well, you don't want to compete against Amazon. After all, like William Neeson and Taken, Amazon has a very particular set of skills that are a nightmare for companies like Maybell Square. So here's the bottom line for the entire gig economy space. After hearing from all these companies, what I see is a confusing situation. Uber, DoorDash, and its car all lower after earnings, while Lyft managed to gain a bit of ground. But the reality is a lot more complicated than that. All four companies supported solid results, but Uber had some gross booking, so I thought this has ended lower. While I still like it, it needs to be monitored. Lifts very much, doing well. I believe in DoorDash, we're going to have to take a little while to pan out. As for Maybell Square, the Parent Company of its car, it's still too early for me to get behind this one, especially with Amazon desperate to take over the online grocery delivery space. And I think they have the horses to do it. Let's go to Rob in Kentucky, please, Rob. Jimmy C, the Chairman of Chill. Man, I like that. I like that a lot. Chairman of Chill. Yeah. On their devotional mission in Cedar Fair, with the impending merger with Six Flags, should I stay on this roller coaster for one more ride or get off now and wave the white flag? Well, this stock just had a major run, and its yield is not that great here. I want you to sell half. Just sell half, okay? Not more than that, but you got to sell half because you just had a power box move. Power box moves are dangerous. You sell half, you let the red can rest play, and you will probably be playing with the house's money. I like that. That's Dr. Chill, please. Jan in California, Jan. Yes. Thank you for taking my call, Jim. My question is regarding the Kaava Group, and you recently said that this could possibly be the next Chipotle, and today it took quite a big dump, and I'm wondering if you think this is company specific or the restaurant segment that it's in, such as something like rival sweet green? Well, I'll tell you, it's an interesting question. I think you're going to get any time you have a move, the way Kaava has moved, which again is in this parabolic move situation. This stock's up 77% for the year, so you got to believe that there'll be some people who say, you know what, just could change, could change, could change, and that's what you're experiencing. It wouldn't be surprising if that didn't go down to 70. It's had such a big run, but I'm sticking by my view that it could be another Chipotle. Let's go to Chuck in North Carolina, Chuck. We are Jim. We are Chuck. Thanks for taking my call. I have a small position, Chipotle. I'm going to life your short and long-term opinion, and also whether I should add more to my position in Chipotle. Okay, I think Chipotle is fantastic. I have to fight you on buying more here because it's had, it is so close to its high, but just hold it, and don't make any sales, because you don't know, it's going to split by the way. In June, you're getting a lot of stock, people would be excited about that. We might even actually trim something a little when it gets to that, but I think Chipotle fundamentals are just fantastic. What great callers, thank you so much everybody. I think the economy sector is a confusing space that requires some more monitoring on a case-by-case basis. I do still like the stock like Uber, but I'm kind of wary of Instacort. All right, much more may have on it. With crude and natural gas prices beginning to tick higher, could now be the time to invest in a name like Constellation Energy, which a lot of you are crazy about. I'm going to update my thesis on what we've looked for so long, I've got to figure out what to do now. Then buybacks don't get enough credit for the impact they have on a stock. I'm revealing the names of a few companies with the right buyback discipline that could help you make some money, and all your calls, rapid-firing tonight's session, they're lining around, so stay with Cramer. Mainly this market's insane is been dominated by the utility stocks, and as of close observers may have money, no, there is no utility I like more than Constellation Energy. The independent power produce gets a bulk of its energy from nuclear plants with renewable kickers. Remember, Constellation CG was spun out of Exelon in March of 2022. I haven't recommended practically the whole way, starting when it was trading at 53 and change, 213. Not bad, better than Sharpe sticking the eyes, I like to say on Wall Street. Now, I knew this was a great story from the beginning, but the crazy thing about Constellation is that at every turn of the story just keeps getting better. Not only after my initial recommendations, a Congress passed the inflation reduction act, the IRA, which did very little, of course, reduce inflation, but included some gigantic subsidies for the nuclear power industry. Plus, over the past couple of years, there's been a growing acceptance that nuclear energy is really the only reliable option to wean our economy off fossil fuels at scale. That's the key word, at scale, because when it's solar and grape, but they don't operate 24/7, nuclear is always on. Even better for Constellation, oil prices have been creeping higher in recent months, and even natural gases climbed up more to your lows, making nuclear more competitive on price. It's just one good thing after another here. In its first two years as an independent company, Constellation's earnings for interest taxes and depreciation and memorization, the key metric for a capital intensive utility nearly doubled. Now, when Constellation reported its fourth quarter numbers at the end of February, management announced that they were switching from EBITDA as the key metric to operating earnings, because the inflation reduction's actually new nuclear energy production tax credits had just kicked in, and it's easier to account for using operating earnings. Wow, it's clear Wall Street didn't appreciate it. I had no idea how great this IRA thing would be, because Constellation got it for $7.23 to $8.03, and operating earnings per share this year. Wall Street was looking for $6.51. Remember, this is utility stock. What a beaten raise. Management also said they expected to grow this number 10% plus clip for at least the rest of the decade. That is usually positive. I mean, it's probably one of the greatest growth stories of our time. Now, one of the stock women from 133 and changed for the quarter to around 170 and two days after the quarter. Crazy enough, Constellation barely got more expensive as it made that move before the quarter. It was traded 20.5 times this year's earnings estimates after the rally. It was traded 22.4 times the year suddenly raised estimates. You see, this kind of thing happens all the time with gross stocks, but it's rare to find this kind of action in a utility, even if it is a growth utility. Then as Constellation kept running throughout March and April, reaching the 190s, even though I started wondering if the stock was getting ahead of itself. But tonight I want to hit the story again, because Constellation already just reported first quarter results last week, and believe it or not, they managed to surprise expectations again. In fact, this is one of the single best reports that we've seen this earnings season, hence why it sent the stock to new all-time highs. First, let's start with the numbers, which were once again excellent. The new key metric operating earnings. Now, remember, it's not an even thought anymore. It came in $1.2 per share. Wall Street was only looking for $1.30. Isn't that incredible? But damping enthusiasm a bit, a tad, was the fact that Constellation declined to raise its full year forecast for this slide item. But at this point, does anyone believe that Constellation will come in below its own forecast? After following the company closely for the past two years, I highly doubt that. Constellation also added another billion dollars to its buyback, bringing the total authorization to $3 billion. They've already repurched $1.5 billion worth of stocks in so far this year, which is the other reason why those things run so much. Clearly, management agrees with me that the stock's still a bargain. What's more interesting to us is the story behind Constellation's ever-improving numbers. Right now, it's thanks to surging demand for carbon-free power for data centers. On the conference call last week, CEO Joe Dominguez talked about several growth drivers from nuclear power, including electric vehicles, electric heating, and the re-industrialization of North America. This is such a re-industrial play. It's incredible. But it's clear that the growth of data centers is the big one. As Dominguez told us on the call, "The data economy and Constellation nuclear energy go together like peanut butter and jelly." He said that his company is, quote, "In advanced conversations and multiple large, well-known companies about powering their needs, these deals take some time but could be finalized soon." No wonder Constellation's so confident it can put up double-digit operating earnings growth for the years to come. No wonder this talks the third best before the S&P 500 this year, up 82 percent. In order to meet all these newfound demand, Constellation is trying to extend the life of its existing nuclear sites, ideally to 2060 and beyond. But they're also talking about adding new capacity, primarily existing sites, because the demand is that strong. That could include adding smaller next-generation nuclear units of specific sites with some earmark for specific clients. When pressed for more details on that subject, later in the call, Constellation's management team said that it received a request from information from Google, Microsoft, and nuclear steel. That's two of the three major cloud vendors in the nation's top steel maker? Well, these aren't signed deals, at least not yet. It's good that there are tons of major companies who desperately need reliable, clean energy so they're only real choices nuclear. I mean, whisper something at you. They're even talking about reopening Three Mile Island, just the one that closed in 2019, but who they have noticed with these guys? At the end of the day, Constellation's energy's been one of the single greatest picks in recent years. But you've had to stay close to the story along the way, because the story keeps evolving and evolving for the better. First Constellation was all about potential and basically scarcity value for those of us who believe in nuclear energy, but realized there were fewer, fewer plays on it. Then the inflation reduction act passed, and the bull taste got even better, including new subsidies for nuclear, making Constellation's product a lot more competitive for corporate customers who already wanted carbon free electricity, and now they can get it on the cheap. This year, the story evolved further as we started to get an idea of just how properly subsidies would be for the company, and now we're getting much more visibility about the drivers of demand in the future, including the insane demand for clean power for data centers, which were putting up like crazy to feed the AI machine. That demand's gotten so strong that major companies are now imploring Constellation to add modern nuclear, new ones, new power plants, and existing plants. Few years ago, we wondered, legitimately, if any more nuclear power facilities would be ever built here in the US, because it was so unpopular and because of the old runs of southern SO. Now, we're just wondering if we can build new ones fast enough. Bottom line, forgive me if I remain bullish on Constellation Energy, even if it's stock is rocket higher. Despite them running from 50 bucks to above 200, we somehow still seem to be in the early days of this story. It's been incredible to witness. And again, I think it's got the legs. They'll go higher but still. They have money back in for the break. When we return, master the markets, one stock at a time. The lightning round is up next. It is time to have the lightning round. Then the lightning round is over. Are you ready, Ski? Day to have the lightning round. Let's start with Stephen, New York, Steve. Happy Monday, Professor. How are you doing? I'm doing well. How are you, Porter? Good. Thank you. So, I wanted to ask you, with the potential for rates coming down, I would like to collect the more yield in my portfolio along with capital appreciation. Okay. I was wondering if you could share your thoughts with me on Alliance, Bernstein, ticker, some more AP. Thanks, Barry. Very well-run company. I always surprised that it is as inexpensive as it is, which is why you've got that big yield. So, I would do support that idea. Let's go to Richard and Georgia, Richard. Oh, yeah. Jimmy Chil and Happy Monday. Oh, same to you, man. We've got a full week ahead of us. Fantastic. What's up? I'm ready. Let's go. Hey. Yeah. Big, big shout out to your crew. They are fantastic. Make me look fantastic every single day. They deserve a raise. Yeah, friend. Oh, I wish I, you know, and I would write them all checks, but that's not allowed. All right. All right. Do you like that? I'll help with this doc. I need to know whether to hang on. I know it doesn't matter where it's been and only where it's going. Right. So, I can't cry about what it was, but where is it going? Do I need to hold on to it, or do I just need to find a better opportunity? And the stock is C-H-H. Cardinal Health. Okay. It's been a great quandary mission. You know, McKesson's been unbelievable, and Core's been fantastic. Jason Haller came on the show. I thought he told a really good story, and then the quarter was terrible. So, let me do this. Let me do this for you. Okay. Let me have him back one. I want to know what happened, because I don't get it. All the other companies are doing incredibly in that industry. Let's learn more. Now, I need to go to Gregory in California. Gregory. Jim, you know, you, Jeff, and the gang are really just hitting all the mops. Thank you. I've been a member for a long time. See? Club members, happy. Thank you. Oh, you know, I love the piece you wrote on the restaurants over the weekend. I like that thing. Inflation beaters, inflation fighters, and inflation lovers. So, this software company that I'm talking about today, they buck the trend of all the others, and beat the strength. What do you know, last week? How high do you think it can go? And it, that is, if it's all coming together, I'm flowing for confluent. Confluent. Oh, my God. I mean, look, that is Gregory so right. If this thing gets together, this thing could just be a rocket ship. But if it doesn't, I'm going to have to say, I think the chances are that it doesn't. And I'm not going to recommend this doctor here, but thank you so much for the time works. Let's go to Josiah in Florida, Josiah. Yeah. Thanks. Take my call. Of course. This P S T G pure storage. Yeah. This is a, this is a fabulous company. It's funny because the previous stock was one other thing. I said, you get it together. It could be huge if not otherwise. This company struggled to get it together for years, and they have gotten together now, and I have to hand it to them. They stuck with it in enterprise storage solution. I typically don't recommend them. I do like your storage. Joanna Pennsylvania, Joanna. Yes. Hello, Mr. Kramer. Joanna, how are you? I bought a stock quite some time ago and have a sense sold it, but it was micro-strategy and it was $1,900. We all find high. And then it started to sell off and it's down somewhere in the $1,300. Right. It's lost $600. Okay. Well, Joanna, all this company really is just to be clear. It trades off of Bitcoin, because Michael Saylor, who runs the company, he just buys Bitcoin. And I think that that's what happened is it's accentuated Bitcoin. I always tell people, if you want Bitcoin, don't buy micro-strategy, buy Bitcoin. And that's what I think you are in. And that's what I think you should do. Let's go to Tori and Louisiana Tori. But the blue y'all, Kramer. Wow. Great to have you. Great to have you. So, we've got a BBAD for months and we're up big. I know they were just selected for replicators last week. I'm just wondering, should I keep holding? Oh, yeah. No, we've been behind an air environment forever. And the reason is because if they make drones that are much less expensive than the other stuff that the military buys, if we're going to win in the wars that were involved in, we need cheap drones, not the real expensive stuff, because the real expensive stuff you can't make fast enough and it's just going to bankrupt our budget. Let's go to Pete and Connecticut Pete. Hey, Jim, how are you? Thanks for taking my call. I'm doing good. How are you? Good. Good. Hey, thanks for all your education. Thank you. Thank you. My question is on a small position I have with STRL. No, every one of these is going to be the same thing, whether it be PWR or whether it be CRH we had the other day sturling. These are infrastructure plays that are working because that money is starting to pour in from the federal government. That's why that's a winner. And you're going to Ronnie and Delaware Ronnie. Hi, Jim. Thank you for taking my call. Oh, my pleasure. My question is about making and U.S. Yeah, you know what, I had some personal care spaces very, very difficult and that is not the one you want to be in. They are, it is an overvalued stock even at these prices. Let's go to Sharon in Minnesota. Sharon. Oh, yeah, Jim. Oh, yeah. So I'm trying to see if you think Oracle is best agreed and if you think it's a good reasonable price to buy here. A lot of people call and say good things about the club. I want to talk about Oracle. I got Oracle wrong. Two quarters in a row, I thought they were going to do it big and then they didn't and I felt it was wrong to continue to hold it. I sold it, sold it at a bad price. I have to defer to others who know Oracle better than I do. That's how I like to look at it. Let's go to Greg and Florida, Greg. Hey, Jim, how are you? I'm good. How are you? Good. Thank you for taking my call and hope your family had a wonderful Mother's Day yet. We had a good Mother's Day. We actually had a good one here. Thank you. Watch your show almost every night and really, really appreciate your daily insights. It's uh, thank you. It's invaluable. I'm calling tonight regarding stock symbol A-L-B. Yeah, that's with you. No, anything connected with the EVs right now is a no-go. That stock's going to just mark some time. Maybe go up a little bit and that ladies up is conclusion of the lightning round. The lightning round is sponsored by Charles Schwab. Coming up, a tool of financial engineering that can sharpen your portfolio, where the buyback is making its mark. Next. When we talk about why stocks go higher, we don't spend enough time, you and me, accounting for buybacks. Primarily comes up, last month, AutoNation, the car and truck dealer reported a pretty good quarter. We didn't get another leg higher for the stock that's rallied from $20 at the thick of COVID to more than 168 today. I'm sure a lot of that comes down to the fact that business requires been pretty consistent, because there haven't been enough of them until right about now. But I don't think AutoNation's stock has truly been propelled by stronger vehicle prices. It's not the net income, which is basically between $930 million, $1.3 billion for the last couple years. It's not the sales, which have gone up, but not by much. Certainly nothing scorching. No, I think it's AutoNation's buyback that's been driving this one higher. The company's share account has shrunk from get to this is pretty amazing. From just 190 million shares in 2020 to around $40 million now. Looking down, the $40 million repurchase would have to stock for heaven's sake. The share account fell went more than 3% this past quarter alone. I bought almost 12% this past year, which I can't. Plus, AutoNation just announced a new $1 billion buyback. I mean, come on, we're taking us a huge company to only $6.8 billion company. These guys don't even make a big deal of it, other than to say that they're balancing the repurchasing with that leverage, mentioning that they paid $250 million for the stock they've repurchased this past quarter. Much of the comfort score was really devoted to the auto industry, as people would expect, right, including availability trends from new and previously used cars. Obviously, some chatter about interest rates are high as usual. But the most enlightening question on the quote came from a fellow named John Murphy, a bank market analyst who noted, "First, your stock is incredibly inexpensive." And then he went on to say that he was curious about, "How the decisions are getting made on sort of the speed and sort of ratios to the buyback." Which is where everyone really was thinking. The answer to Murphy got was pretty matter of fact. I mean, I think it's why buybacks don't get the attention. They should. AutoNation basically said they have a plan in place that uses a grid, and the grid kicked in at the end of the quarter, causing them to buy a lot of stock. They didn't have a ticket with the grid holes, where the buybacks gets bigger, where it gets really big. Instead, they emphasized that they're certain from what they can do, because of the law. Buybacks need to be more or less automatic, or else it's too easy to manipulate your own stock price. In the end, AutoNation's CFO, Tom Slozing, explained that, quote, "Our opportunities were somewhat limited, but it does remain a key part of our capital allocation strategy." You won't hear me criticize any company of that big a buyback one that's made so much money for shareholders. But I think there should have been more of a recognition that AutoNation's incredible success fuels the buyback, which in turn fuels its stock success, and in the end, that's all really care about. It's something that makes a ton of sense when you consider this stock sells for just over eight times, six years, or eight years. You guys are really good operators. It'd be 16 times or eight, so they still had the same share account that they did in 2020. But in the hedge fund world that I came from, I think I would have added the following in the conference call. As long as there are stupid idiots who sell the stock of our terrific company down at these ridiculously low levels, we will keep buying it back because it's much easier to make money for our shareholders than sell in cars and trucks. Like I said, there's always more work you saw, but I promise I'll find it just for you right here in my money. I'm Drew Kramer. See you tomorrow. This 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 Bunny disclaimer, please visit cnbc.com/madmoneydisclaimer. Dave's company just got the first ever five-year price lock guarantee from Comcast Business. It's five years of gig speed internet, advanced security, and a great rate that won't change, all from the company with 99.9% network reliability. He hasn't given this many high-fives since Deborah brought in her famous banana bread. The Comcast Business five-year price lock guarantee. In Z8-21-24, guaranteed rate applies to monthly service charge for new customers on qualifying internet bundle, excluding taxes and fees. Other restrictions apply.