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tv   Mad Money  CNBC  January 30, 2017 6:00pm-7:01pm EST

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f-u-n. dry ships is back. do you know what else? honeywell. >> we only have 10 seconds. meantime, meantime, "mad money" with jim cramer starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate you. so call me at 1-800-743-cnbc or tweet me @jimcramer. when things are happening fast with a president who has a pro-business agenda, the market will lap it up and buy stock.
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>> buy, buy, buy. >> but when that president starts spending his capital on issues that have nothing to do with business, then investors get spooked. they get nervous. they get nervous about his economic agenda. you know what they do? they sell, as they did today with the dow sinking 123 points, s&p falling 0.60%, and the nasdaq tumbling 0.83%. worst close of the year, but still up nicely from the lows of the day. historically investors don't like uncertainty or confusion. it creates an environment where taking profits seems to make a ton of sense even as we ultimately went down a lot less than many people feared going into the session. nevertheless, i have to tell you i thought this selloff felt pretty rational to me as they go. wall street loves trump's economic agenda, deregulation, repatriation of overseas assets, lower corporate taxes. but any political risk that gets in the way of this plan is, i believe, a solid reason to ring
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the register. with business improving across the board, it's political risk, people, that can hurt this market now more than anything else, not earnings risk, not federal reserve. political risk. executive orders that come out of left field create confusion about who can come to this country and who can't, whether you agree with them. almost certainly delay trump's pro-business agenda. they slow it down simply because they push it back in the queue of issues that need to be dealt with right now. a debate over these new immigration rules will easily knock any other debate off the table and blunt any fast-track attempts to get taxes cut. it has the potential to kill the economic agenda entirely because some key senators that were on the trump team might defect because of pressure from their constituents or their contributors, maybe both. the other night when the protests broke out over this immigration decree, my twitter feed was flooded with people who
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expected there would be a crash database not expected. said there wrote definitely be a crash today. a total repeal of all the gains we've seen since the election. hi to stop looking at that feed by 7:00 p.m. it was so filled with negativity, predictions of the biggest selloff in years. hey, cramer, why didn't you call this crash? but while this has been the worst day for stocks in a while, it wasn't as brutal as you might have expected if you believe erroneously that this whole market hinges on politics. even though the political blowback has been huge, there's still no real reason that we'll up trump's coalition on economic issues yet. plus as emotional as these moments can be for many people, stocks trade on earnings per share, not emotions per share, until the earnings get knocked down by political risk translated into actual legislation. i would say this, though. when the worst day for stocks this year, we got a glimpse of a new rear-guard action. for the first time we saw --
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>> not a trump stock. >> -- the not a trump stocks make a move, notably the retailers, stocks that haven't been up in ages. stocks like macy's, nordstrom, dollar tree, dollar general. you know what that move means? it says the president's attempt to impose a border tax will fail because these retail stocks have been pummeled ever since trump subtly said maybe we should be taxing imports from overseas. anything that set back trump's broader agenda now has a cohort of stocks that go higher. it's a big change that's certainly worth noting although you have to remember there could be other non-political reasons why those stocks have been coming down. reasons like the endless destruction of bricks and mortar retail by amazon. the fact that a border tax is less likely doesn't suddenly make these not a trump stock buys if they have serious non-political problems. how about the ceos who spoke out against trump? all day people have been asking me do i want to buy shares in a company where the ceo injects him or herself into politics by
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criticizing the president on an issue that's not necessarily directly tied to their business? this is not an easy call because i can't remember seeing this kind of outcry among the execs before. now, there have been issues like gay rights where we've had ceos speak out, and that could be the most likely analog to this. many executives have publicly advocated against state-level legislation that's widely viewed as being hospital till to gay rights, and their statements ultimately had no impact on their stocks. no impact. i think that's pretty much the road map with this outcry over trump's new immigration rules. no impact. you buy the stock of a company because you like its business prospects, not because of the ceo's politics, especially when many of these execs are simply trying to show members of their workforce that they'll stand up for them. however, if a ceo sharply criticizes the president for his decision making, you may have to wonder whether this president
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will target that company and potentially damage its business. trump might feel the need to retaliate and that's got to be a factor going forward when you're thinking about buying these stocks. to put it another way, you own the stock of a company with a ceo who picks a fight with this president, well, you should make @realdonald trump your home stream on both desktop and mobile. again, those, the president is not omnipotent. unless he can use his bully pulpit to change laws that impact the actual earnings of companies that do business with the government, i don't think you've got that much to worry about. headline risk, but you know what? if he simply gets his retribution via twitter, i might end up coming out here and saying that's a buy opportunity. this is a brave new world. it's uncharted waters. for most investors, brave new worlds, these are reasons to sell. so today's action was hardly surprising. i'm not saying get used to it. i'm saying this kind of volatility is not yet built into stock prices and maybe it won't
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be until we see some lower levels. still, i say i saw some opportunities today that i'd like to circle back to because you know i like to come back to companies that have done well off of earnings. and there are loads of them in sectors like aerospace, the banks, the semiconductor stocks, and the home builders. i know oil was down today, but i think that too is on opportunity because the president can deregulation the energy industry without the help of congress. and oil and gas deregulation is the easiest to get done. buying oil stocks, that just might be tomorrow's business. but you know what the main takeaway of today is? that we didn't crash. we had a garden variety selloff. just because the president did something that generated a lot of public blowback, that doesn't mean we suddenly erase all of our gains since the election. sure, if trump did something like this every single day, then we might be headed a lot lower just because people can't take the aggravation of owning stocks. right now, though, i think we've
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got a total different takeaway. companies that are doing well saw their shares go lower during an emotional selloff lead by the s&p 500 futures this morning. then when these stocks of high quality companies started to bottom, big institutions came in and scooped them up. they used the political-inspired negativity to buy, not sell. that's the pattern we need to watch. the pattern of what looks to be a defeat for trump or a heavy dose of worldwide media negativity about one of his moves that then brings down the stocks of companies that are in great shape, which then bring in buying by opportunists who recognize that the economy itself won't be derailed by anything involving visas, green cards, refugees, or immigration. heartless? a heartless view? maybe. but to me, the stock market is simply weighing controversial political news versus equity valuations and it likes those valuations when the smoke clears. cynical? not really. the bottom line is simply that
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in the end, politics and money do mix. they just don't mix all that easily when it comes to the stock market. you should always view the market as a weighing machine for the net worth of the companies themselves regardless of how you might feel about trump's edicts, his views, his tweets, or for that matter, any communication that he might be willing to put up at any given hour of the day. let's go to spencer in north carolina, spencer. >> caller: booyah, jim. >> booyah, spencer. >> caller: my stock is ulta cosmetics. i've been in long, and i was -- it's hitting resistance. if you were me, would you sell or hold? >> okay. look at that, sell or hold? have we ever thought about buy? i think ulta is one of the few retailers you can own because we are in a selfie generation. we are in a snap generation. we are in an instagram generation. ulta has the stuff you need to be able to go outside your
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house. well, i mean i go outside without it, but i'm one of few left. suzanne in maryland, suzanne. >> caller: hi. you've been wary of the retail sector, i've noticed in recent months, but i would appreciate your thoughts on what i term niche retailer, lululemon athletica. >> this is a great question. the reason why it's a great question, suzanne, is there are niche retailers that i can get behind. lulu is one of them. matt boss at jpmorgan has made a very good long term runway call on lulu. i'm sticking with that. that's what i think is actually can transcend. it has a model that can transcend the weakness of bricks and mortar. i know it's not a pretty one, but this selloff, it was pretty rational. remember, the market, it's just a scale trying to keep, let's say, trying to figure out what something's work. on "mad money" tonight, forget
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earnings per share. is it earnings per presidential tweet? i'm eyeing trump's impact on the averages on a daily basis. then could rev group put your portfolio into high gear? the company went public on friday, and tonight i'm dissecting its ipo. and my exclusive with the ceo of one red hot stock called united rentals. the company crushed the quarter and the stock popped on the news. is it a buying opportunity? stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to or give us a call at 1-800-743-cnbc. miss something? head to >> announcer: lightning round is d dys
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when trump speaks, he moves the markets. but he often does so in strange ways that sometimes deck stocks and sometimes just cause glancing blows. take this morning when the president sat down with small business leaders and talked
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about what he can do to help them. first thing he says? >> we cut approximately $600 million off the f-35 fighter. >> now, we know this joint strike fighter deal is at $1.5 trillion program. we also know these planes cost approximately $150 million a pop. next to those numbers it looks like a drop in the bucket what the president saved. but he says this is a $600 million savings for a run of about 90 planes, in which case it's decent enough that the federal government wins even as lockheed martin, the company that makes these planes, doesn't really get hurt that bad. it's a good negotiation. stock barely budged today. still trump's controlling the stock price of lock immediate martin more than any analyst. next up -- >> i want the pipe to be manufactured with united states steel. >> all right. that's trump saying he wants u.s. steel makers of oil pipeline tube to benefit as part of the oil and gas deregulation
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that he's delineating. that's a big deal because when you go to drilling sites -- and i've been to many of them -- you do not see much american-made steel pipe. i once asked the late aubrey mclennan back when ef was running chesapeake energy, the most aggressive driller in the country at the time, whether he was using u.s. made drill pipe. he felt terrible about it, especially since they had so many plants devoted to making this kind of pipe. but he told me he needed to save money, and importing pipe from mexico was really the only choice for prudent business person. so when you hear the president vuz on trade and steel pipe, immediately you need to be ready to jump on u.s. steel as long as the numbers away from oil country tube are good. you can't suspend the homework because of a tweet or statement. you need to be ready with the trade and the investment. then finally in this one little snippet, trump took on dodd/frank, the financial regulatory framework he inherited.
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>> dodd/frank is a disaster. we're going to be doing a big number on dodd/frank. >> all right. that doesn't necessarily mean you should go buy a bank stock especially on a day when trump's business agenda was being challenged by other issues. it does show you how important smashing dodd/frank remains to this president and that's great news for everyone who owns shares it banks. president trump makes business news pretty much every minute of the day. yeah, president obama, when he first got into office, he did too. i'm not talking about the stuff related to the bailout or the financial crisis. when obama called bankers fat cats, the stock got rattled. make no mistake about it, what we're seeing now is very different from obama, who talked about a gazillion things that never had anything to do with the stock market at all. the casino fat cat stuff, frankly it was never repeated. here i'm referencing one little snippet, and it mattered to your portfolio.
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this president attacks and surges and negotiates in the open in a way that impacts your stocks constantly in realtime, sometimes with yours truly narrating the damage as i did this morning on "squawk on the street." as long as we're ready for his comments, we can profit from them. more important, we can get used to them occurring as jarring as they are and not freak out every time something like this happens. it's a new world, a world of earnings per presidential tweet and photo opp, and we'd better adjust our horizons and accept that this president can impact stocks like no other in history and that it's likely to be a daily occurrence. much more "mad money" ahead. if you play with fire trucks, will you get burned? if rev group's ipo is anycation, the answer is no. then with news that trump is building a border wall, could a play like united rentals pay? i'm sitting down with the ceo after earnings to find out. plus ethan allen can help you decorate your place, but the stock is struggling to look pretty.
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i'll ask the ceo if he can rearrange its outlook for some better fung sha way. stick with cramer.
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while everyone is worrying about washington, i think it's worth remembering that the stock market is a market of individual stocks, that it represents pieces of specific companies. it's not about the direction of the averages. you can still find winners even if a pretty broad selloff like we had today. which brings me to one of the stocks that was up nicely this session. rev group. the symbol here is revg. this is a fresh-faced ipo that just came public last friday. now, rev group is a manufacturer of specialty vehicles. i want you to think school buses, ambulances, fire trucks, street sweepers, mobility vans, and rvs. this deal really caught my attention not just because of the flashy trucks that were all over the stock exchange on
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friday. what actually got me intrigued was the fact that rev group is run by tim sullivan. tim sullivan, long time viewers might remember as a member of the "mad money" wall of fame, the former ceo of bu cyrus, who sold his own mining equipment company to caterpillar in 2010 right near the top of the commodity cycle. it was a brilliant move and one that made shareholders a fortune. so when i saw that sullivan is now back running a publicly traded company again, it actually caught my eye. that's why tonight i want to do a little extra digging and plano your ipo with rev group because i think this could be a pretty compelling story at some point. clearly i'm not alone. rev group kim public at $22 and spiked up to 13.6% before tacking on another more than 3 hrs gain today. i wish it hadn't done that because i intended to come out and say this is our chance. the stock has obviously had a very big move. what exactly does this company have going for it aside from the terrific ceo? we know rev group makes
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specialty vehicles, fire and emergency, commercial, and recreation. they're the number one by market share in the ambulance market, number two in fire apparatus, number one in school buses, medium size commercial buses and light broom. they're not too far behind rv maker thor, and you know we think thor is terrific. made a lot of money for people and i'm proud of that. all together, roughly 72% of ref group's sales come from businesses where they're either one or two by market share. they've got high quality big ticket vehicles and each of their end markets are supported by some powerful long term secular growth trends. rev used the demographic shifts, the growing elderly population in america, should increase demand across all of their segments. more old people means, yes, indeed more need for buses and ambulances. plus a lot of fire trucks and ambulances out there need to be replaced.
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during the great recession, states and municipalities fell behind their historical replacement rates and the company now estimates there's pent up demand worth about 15,000 vehicles just from the need to swap out older models with newer ones. we know the rv market is on fire. witness the strength of thor industries, and as for commercial buses, this is a play on the increasing urbanization of america. rev is unique in that it's the only specialty vehicle maker that covers all three of these categories even though an ambulance and bus and fire truck and rv use the same parts. that gives them tremendous bargaining power to get lower prices for these parts. meanwhile, this company is a consolidator. for years they've been making strategic acquisitions to bolster its growth. just over the past decade, they've done nine deals that have help them become the leader in many of their end markets. at this point, management led by tim sullivan has gotten very good at buying new companies and integrating them into the rest
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of the business. so any future deals will likely be very positive and move the stock higher. how about the numbers? in 2016, rev group delivered 11% sales growth, 12.6% gross margins and those are up 160 basis points year-over-year. that resulted in a nearly 32% increase in net income. not too shabby. very impressive although in the past the numbers have been a bit lumpy, and that's of a concern to me. in 2015, their sales were up less than 1%, but their profit more than doubled because it was growing off a low base from the previous year. even if the goeth had been disjointed. it's ahead of most ipos. this is not some brand-new company with an unproven business model. these guys know what they're doing. i like these kinds of hard stocks. you know what i mean? i mean backed up by real companies. then of course there's that wall of fame factor. here on "mad money," we only put a chief executive on the wall of fame after he's retired from the game. usually by selling his company
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to another business for a fabulous premium for you, the shareholders. that's exactly what tim sullivan did at his last job, when he was running bu cyrus, the mining equipment maker. he sold bu cyrus to caterpillar for $92 a share in 2010, giving you a spectacular 410% gain versus where the stock was trading when we recommended in december of 2008 at the very depths of great recession. what makes this even more impressive is the timing. only a year later the mining equipment business peaked as demand for coal, the main commodity this machinery is used for, started drying up, and the industry's been in free fall ever since. just look at bu cyrus' old competitor joy, joy global, which peaked a few months after bu cyrus got acquired and then spent the next five years getting obliterated before it too was acquired. in other words, it was a terrific time to sell, and i think that's meaningful. the fact sullivan chose to take it public right now makes me confident he thinks its business will ram going forward.
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all that said, not everything is hundred ki dory. i've got some concerns about rev group. for starters, three months ago, the company had $260 million in debt. while they'll likely pay most of that debt off with the proceeds from the offering, it's not a perfect balance sheet. they have a private equity sponsor and these deals have a history of being somewhat hit or miss. before the deal, rev's partner owned nearly 90% of the company. they still own a majority of the business, which means the private equity guys are still running the show. plus there's the huge potential overhang created by the fact the private equity firm is going to need to take profits. it could really hammer the share price. we've seen that. what else? it is a very cyclical company. it's levered to the health of the u.s. economy as well as the fiscal soundness of state governments. a week ago i would have said this is a total positive. but if president trump's growth tripod gets derailed by other
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more controversial elements of his agenda, then the economy might not accelerate as much as we hoped. my final concern, the stock is not that cheap. we don't have any forward estimates for rev group, but if they keep growing at the same pace, that enhas the stock is trading at 40 times this year eave earnings estimates. that makes rev seem pretty pricey and i think thor even after this run is a still a bargain. put it all together, while i adore tim sullivan, i think it might be too soon to tell you to be in this one. i want to see a couple quarter ily reports. here's the bottom line, rev group has an intriguing concept and an amazing ceo. but it's also got an imperfect balance sheet, and a history of somewhat lumpy numbers and a stock that's already none too cheap. that said, its management is superb. if an opportunity avails itself in a dip, this might be a very good stock to buy and put away or be ready for a secondary
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offering from the private equity firm so you can get in at a discounted price. let's go to carol in new york, please, carol. >> caller: booyah, jim. >> booyah, carol. how can i help? >> caller: hi. i was wondering autozone. their last earnings seemed pretty good, but then all of a sudden, amazon came in and said that they're going to start selling auto parts and been around to all the manufacturers and everything. >> right. >> caller: and ever since, it's been going down. i'm really concerned, and i'm wondering what should i do? >> you know what, carol, this is a really interesting question because when i read that story about amazon moving in, the first thing i said was, wow, i've been behind autozone for about 500 points and i'm sure it's going to deck the stock and people are going to panic. i urge you to stay in place. autozone has got the best buyback. they are a fantastic operator. a.a.p. is a company out there that can be consolidated.
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i am not as threatened by amazon. i think the articles may have a little bit too much hype. everyone is scared of amazon. it's not wrong to be scared, but that said, i'm a buyer of autozone, not a seller. and i am reiterating that right here, right now. let's go to coral in california. >> caller: hi, jim. thank you forricing my question. given the fact that trump's tweets and his other comments seem to have affected the value of lockheed stock, what do you see as the future value of lockheed in the next six to 12 months? >> this is a great question. it was interesting. i was on "squawk on the street" when the president talked about the price of what he was saving for the joint strike fighter, and it was $600 million. when you look at it over 90 planes, you think, wow, that's going to hurt lockheed. lockheed is a very lucrative company. the stock did not go down. it was actually up when that was announced. however there is a division of lockheed, and it does have some accounting regularities.
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so what i feel is important to say even though lockheed had been my favorite defense contractor, i am shifting right here. if did a lot of work on general dynamics over the weekend. i think selling lockheed martin and moving to general dynamics is a very good and shrewd, and i have to say -- let's say more conservative move. not a lot of head on general dynam dynamics. know your ipo. rev group has some potential. but it's too little too soon. i don't want you to really pound the table yet. much more "mad money" ahead. united rentals posted a phenomenal quarter last week that saw the stock rise like one of its scissor lifts. i'll talk with the ceo. then my exclusive with the ceo of ethan allen. he is a muslim immigrant from india, and he serves as co-chair of the muslim jewish advisory council. tonight i'm asking how trump's executive order could impact the economy and his company. and all your calls rapid fire in tonight's edition of the lightning round. so stick with cramer. s,, la
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on friday night we did a deep dive into one of the hottest stocks, united rentals,
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the largest equipment rental company on earth. united rentals makes its money renting out machinery to all sorts of construction firms, utilities, oil and gas companies. it's a lucrative business because renting this stuff tends to be a lot less expensive than buying. ever since the election, people have been flogging united rentals as the ultimate trump stock because it will make a fortune if the president can pass his economic agenda, which could potentially turbo charge our gdp growth. i believe it can. plus if trump can sell congress on the $500 billion in infrastructure spending he campaigned on, you have to believe a lot of that money ends up in the pocket of united rentals. but last week we learned this company doesn't even need any presidential assistance. united rentals priority reported a blowout quarter on wednesday night, a 43 cent earnings beat off a 2.24 basis, higher than expected revenue, and an additive acquisition, the purchase of nes rental holdings,
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which will help the company expand further into the east coast, gulf coast and midwest. stock shot up 11% on the news. it's still pretty darn cheap at these levels. this is one of the most compelling stories out there. let's check in with michael kneeland, the president and ceo of united rentals to dig deeper into the quarter. mr. kneeland, welcome back to "mad money." good to see you, sir. thank you. i got to tell you it was an astonishing quarter. as the quarter went on, did you realize, holy cow, business is really picking up in this country? >> what we noticed as we went through the farther quarter, we really saw a pickup of demand in december, which was a little unusual. >> right. somehow i know you could relate it to the end of the election. you could relate it to trump optimism. a lot of people have relating it to the fact that unemployment has gotten better. which do you think is the best thing? >> i think unemployment is definitely a key factor. you know, when you see people going to work, having money,
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consumer confidence, i think out of the election, you know, things became more positive. and people started thinking differently. and as a result of that, you know, we started to see things move. >> now, when people -- you say people see things more positively. you'll have a weekend like this weekend where there's a lot of controversy. visa issue and there's people on both sides, but it's a lot of noise. does that eliminate the optimism, or are they very different things, one have toing do with jobs and growth of an economy and the other with a political issue? >> i think the political issues are going to come and go. i don't expect them to go away anytime soon. when you look at the fundamentals and you look at, you know, some of the things that we see from our customers and consumer confidence and also, you know, confidence in ceos right now, it's positive. so we see that -- we look forward to that demand. and if you look at our industry, just this morning ara came out with a new guideline that says over the next five years,
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they're expecting growth to be around 4.3%, which is pretty robust. >> i was surprised when i read through the different things that -- look, trench, power, and pump. we get that. but data warehouse. when you build a data warehouse, it's probably the fastest growing part of the economy. a data house tends to start with united rentals equipment. >> yeah. if you think about it, they have to start a building. once they go through, they have to put all the materials inside of it. then after that, they have to maintain the building. so it works out well for us. >> it also turned out that -- i don't know. you've done a lot of things to streamline. but your operating cash flow took me by surprise. you're making a lot more money now. is it just because times got a little tougher and you got a little tougher or has it always been a huge cash generator and it flows through this time? >> we've said for many years we want to be positive cash flow throughout the cycle and we have been that. you're right. i mean $1.18 billion of free cash flow was a significant amount of money.
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>> right. now, you bought back a lot of stock but you also made an acquisition. it didn't seem like it's either/or, that you're doing so well that you can continue to do both? >> yes. we have enough flexibility, nes as you mentioned was a great acquisition for us. it's a great run company. good people. united rentals needs people to grow, and so we see this as a very attractive, you know, acquisition for us. >> i know bears have told me, you got to be careful, jim. this thing has already moved. it's had a great -- a really great trajectory. but when i look at other countries and how rentals have surged there, i have to believe that our country has kind of been slower to get the ease and the gain that you have from renting versus owning. >> well, you're right. i will tell you if you think about it, you know, my daughter's's millennial. they think about the shared economy and na is really starting to focus. i've always told her, sweetheart, we are in that shared economy. >> right. >> i see that continue to grow. >> that's a very good point. now, look, i mentioned all those
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things. but if trump did get his way, okay, there are issues. deregulation. he does want a lot more pipelines built, and we have frankly a tremendous demand for more pipelines. i figure that plays well into your world. >> it will, but i will also tell you based on the forecast from ara that would all be accretive to the growth. >> okay. if there were a wall to be built, i have to believe that when walls are built, there's a good chance that united rentals is involved. >> that's a fair statement. you know, i think about it. it would be a large contractor. it would be a massive project. in order to expedite that quickly, they're going to need equipment. >> but when you look at your budget, you're trying to budget to your trend, are you including in your board meetings the possibility of a trump resurgence or are you just looking at your own trend line and saying as long as employment stays strong, as long as the country stays strong, we're going to do well? >> we always look at it from our customers and poll it that way. we have the flexibility. we have the cash flow. if we want to flex up or down,
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we can do that. >> my last comment, your stock should never have gotten down as low as it did because the business never really faltered. >> i think the expectations. throughout 2016, we started out in the first quarter with a lot of economic uncertainty, and then we still have the oil overhang. >> right. >> within our industry, we had overfleeting. as we went through the year, those all kind of dissipated. >> right, and it all came out right for you. that's why i think the stock's not done. that's mike kneeland, the president and ceo of united rentals. yes, it's a trump stock. more important, it is a stock of a company that does well when the u.s. economy does well, and that's what's happening. "mad money" is back after the break. rdge ha rdge s sbe
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sponsored by td ameritrade. it is time! it is time for the lightning round on cramer's "mad money." that's where i take your calls rapid fire. you tell me the name of the stock. i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." let's start with willa in virginia, willa. >> caller: hi, dr. cramer. i love your show. >> oh, thank you. >> caller: i have a question
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about cisco, whether i should hold this stock or sell it. >> my charitable trust has a big position. it's funny because i was going back and forth and doing a lot of forensic accounting. they say that cisco is going -- come on, man, its business is good. that stock's a buy. joseph in florida, joseph. >> caller: booyah, mr. cramer. >> booyah. >> caller: how are you? >> i am doing great. how about you, partner? >> caller: so far, so good. thank you. i want to ask you some questions regarding u.s. steel. there is a lot about the wall in in mexico and also a lot of steel. >> indeed. in the end, i got to default to best of breed, nucor. if you want a steel stock, i have never gone wrong recommending nucor since 1985. you think i'm going to change my stripes now? no. howard in florida, howard.
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what's going on? >> caller: potash. >> i am a believer in the agriculture complex. if i like deere, and you know i do, then i have to like mosaic and, yes, potash. unbelievable. boy, i tell you. what a little bit of argentinian and brazilian buying can do. how about briton in california, briton. >> caller: big booyah from l.a., jim. >> nice. >> caller: i'm a big fan. >> thank you. >> caller: i bought weyerhaeuser at 29. it's between 30 and 31. should i sell it. >> no, no. i like that yield. i think the stock's a buy. i like the wood and paper complex entirely. and that, ladies and gentlemen, is the conclusion of the lightning round! >> announcer: the lightning round is sponsored by td ameritrade. g rm.knth
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okay. what the heck just happened to the stock of ethan allen interiors, the chain of roughly 300 design centers mostly in america that serve as the shops for all your home decor? you may have not noticed in the flurry of earnings report but they delivered some less than stellar numbers and the stock got hammered. now, we know it's a tough time to be a retailer but i found the reaction to ethan allen's
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results somewhat puzzling given the company had already pre-announced to the down side less than two weeks before, causing the stock to lose 10% in a single session. then when they beat the estimate by a penny, even as revenues came in a tad lighter than expected with a vicious 5.4% decline in same-store sales, still, pre-announcement but the stock got hammered again anyway? to be fair, it was up against some very tough comparisons this quarter, and management has a plan to turn things around, including a major refresher of their product earnings, more marketing spending, renovation of their stories and the introduction of new technology. but wall street seems skeptical so far. let's take a closer look with farooq kathwari, the chairman, president and ceo of ethan allen interiors. welcome back to "mad money." >> it's always good to be here. >> now, i did find it puzzling. i know you had guided down, but it was off a very difficult comparison the year before. but people seem to be thinking, you know what, we want to be cautious about anything
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involving retail, anything involving furniture. is there some sort of secular shift for people who want to spend money, say, on a cruise or spend money taking selfies but not spend money on their furniture? >> you know, gjim, i feel more strongly about our future now than in the last few years. now, the stock was down for a number of reasons. first is that we were first comparing ourselves to very high numbers. >> right. >> secondly, it's interesting. i said as we move forward, we're going to increase our marketing spend. >> right. >> now, i will not -- we will not increase our marketing spend if i do not feel comfortable that we are going to have growth. and the interesting thing is that many of these analysts were interested in, in the last few years, asking us increase the marketing spend. i said, no, we're not ready. now we are more ready. we have great offerings, our retail network, our manufacturing, our designers. so i said we're going to increase it by 20%, and also
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this quarter that we're coming into, last year we had a 89% increase in earnings. >> right. >> you know, you have great earnings, and then you say to people, take that into account, it creates issues. >> let me ask you. you have taught us that there is also a relation between the stock market and ethan allen. we've had a pretty good stock market, but it didn't seem to bring the traffic i would have expected. >> well, you know, when the elections were taking place, i was somewhat surprised that traffic did stay somewhat consistent. however, right at the elections and after that, people have been somewhat nervous. they have been concerned. i think the change on many, many factors is good and important, but other factors, maybe people are somewhat concerned and
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holding back. so i think that has been a factor, especially in disposable areas. >> so your marketing spend, 20%, how much will that increase in dollar amount, and where will you use that money? >> we are going to spend approximately in the next six months, over $20 million, and we are going to spend it in both the digital as well as traditional mediums, including television. we have not been on national television. >> right. >> and last year i felt that with all the money being spent on elections, it was not wise to be on national television. starting next month, in fact, february, we are going to have a very, very strong national television campaign, which we haven't had for a number of years. >> will it include the disney line that we're sitting on? >> well, disney is a very important part of our program. it was about two years back i took my granddaughter to disney, and i thought this is something we should do. i called the ceo, and he said
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absolutely. so we developed 500 great items, which i say is ethan allen disney magical home. we just launched it this month. >> so it's not had impact? >> no, it hasn't. i think this is going to take a little time. in fact, i have brought for you a present. it's a book that just came out. it's a book for our ethan allen disney, which i will pass on to you. i also brought you a great book we just published which is the journey of american style. ethan allen represents the american style. so i think disney also in june, we're launching it in china at 35 locations, and i think it's just getting started. >> let me ask you, i know this is something not in my bailiwick, to ask about religion. my parents told me never speak of religion anywhere but the home, but here i am on tv asking someone. i preface it saying this is not
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my forte so to speak. but you are muslim, and are the co-chair of the muslim jewish advisory council and ceo of a publicly traded company with 5,000 employees. did you have a reaction, visceral reaction to what happened this weekend with president trump? and if he were to call you, would you advise him to do anything different? >> yes. well, i think this is an important issue. i decided to join this and actually co-chair with stanley bergman. >> who has been a frequent guest on the show. >> a good friend of yours. he told me that. he runs, you know, henry schein company, and it was organized by the american jewish committee, and they put together a group of people which is bipartisan. republicans, democrats, from senator lieberman of connecticut to senator cohen from minneapolis, and many others. it is politicians. it is also religious leaders,
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and we decided to co-chair it because today you want to show that people are together. it is not against any administration. this was being discussed for months and months. and the objective really is not to talk about the facts that we are against the administration. >> right. >> but we want to show that we should speak together. we should also speak against any hate. >> right. >> and even recognize the contributions of americans who are muslims and american who's are jewish. >> in that case, were the scenes at the airports -- did they disturb you as someone who is someone trying to unite? did you feel there was divisiveness and maybe that's the wrong course? >> well, look, jim. i came as a young student and was working during the day, went to school at night at nyu, and seven years later i became a ceo of a major financial company on wall street and then ended 30
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years back heading ethan allen. well else in the world with somebody with a name like fraooq -- i mean i love america. america is great, and we must give that opportunity to others as well. >> i'm going to leave it there blauz this is the first most optimistic thing i've heard in the last 72 hours. i'm grateful for you coming on "mad money." that is farooq kathwari. he's the president and ceo of ethan allen. you're going to be seeing the ads on tv in just a couple of days. stick with cramer. be !!ot surhoc
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remember, you got to take a deep breath. big takeaway today is we did not crash. we did not repeal the entire trump move. when you think of it like that, i need you to be thinking about companies, okay? not the s&p 500. individual companies that you might want to own at good stock prices. >> announcer: lightning round is i like to say there's always a bull market somewhere. i promise to try to find it just for you right here on "mad money."
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i'm jim cramer, and i will see you tomorrow! >> narrator: in this episode of "american greed"... >> that woman had a gift. she had some sort of voodoo magic over these men. >> narrator: what nanette johnston wants, nanette johnston gets, and her sorcery has one aim -- turning sex into money. >> she was a gold digger. it was obvious. and he went for that. how smart is that? >> narrator: she steals multi-millionaire bill mclaughlin's heart. then she steals his fortune. but when he becomes suspicious of her spending, this femme fatale's options turn deadly. >> he must die or the money dries up. nanette needs to find somebody stupid enough, violent enough,


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