Mad Money 04/25/25 | Audio Only

Key Concepts

• Earnings Season: A period when many public companies release their quarterly earnings reports.
• Tariffs: Taxes imposed on imported goods.
• Trade Deals: Agreements between countries to reduce trade barriers.
• Subscription Business: A business model where customers pay a recurring fee for access to a product or service.
• PE Multiple (Price-to-Earnings Ratio): A valuation metric that compares a company's stock price to its earnings per share.
• GOP-1s: A class of drugs used to treat diabetes and obesity.
• CPAP/APAP/Bilevel: Types of positive airway pressure therapy used to treat sleep apnea.
• AI (Artificial Intelligence): The simulation of human intelligence processes by computer systems.
• Generative AI: A type of AI that can generate new content, such as text, images, or code.
• Data Center: A facility used to house computer systems and associated components.
• Broken Stock vs. Broken Company: A stock that has declined significantly in price, but the underlying company is still fundamentally sound versus a company with serious underlying problems.

Earnings Season and Market Outlook

• The market experienced its second-best week of the year, with the Dow, S&P 500, and NASDAQ all advancing.
• The focus is shifting to earnings reports, which will be crucial in determining the direction of the market.
• Uncertainty surrounding potential trade deals adds to the complexity of the market outlook.
• Kramer emphasizes the importance of trade deals, stating that the market can absorb earnings disappointments if trade deals are in place.

Companies at the Epicenter of Trade and Tariffs

• New Core (Steel Giant): Reports on Monday. Kramer notes that New Core is at the crossroads of economic weakness and benefits from tariffs. He emphasizes the importance of protecting domestic steel companies.
• General Motors (GM): Reports on Tuesday. Kramer states that it's crunch time for tariffs and it's unclear how much they'll add to the price of new vehicles. CEO Mary Barra is known for providing a straightforward assessment.
• UPS: Could provide insights into the impact of tariffs on demand and international disruption. Kramer hopes the news doesn't disrupt the dividend.
• Coca-Cola: It will be interesting to see if Coca-Cola can maintain its momentum.

Key Stock Picks and Investment Strategies

• Spotify: Kramer's favorite trade for the week. He highlights its subscription business and sees it as a competitor to Netflix for entertainment time.
• Starbucks: Kramer expects Brian Nickel to outline a strategy for both domestic and international operations. He acknowledges the stock's stalled performance but maintains a hold rating.
• Meta Platforms and Microsoft: The street is split on these two. Kramer believes Alphabet's robust ad business should alleviate concerns about Meta's advertising business. He emphasizes the need for Microsoft's co-pilot to gain traction and for Azure to accelerate growth.
• Eli Lilly and CVS: Eli Lilly is riding the wave of GOP-1 success. CVS is under new management and has shown good numbers in both its health insurer and drugstore businesses.
• Louis: Kramer is counting on a better report from Louis, which is held in the travel trust.
• McDonald's: Kramer believes McDonald's cheaper offerings have attracted customers.
• Apple: Kramer believes Apple can work its way out of any abyss that is China. He is counting on CEO Tim Cook to spell out a trade strategy that includes the role of India in making phones.
• Amazon: Kramer believes the retail world is undergoing consolidation towards Costco, Walmart, and Amazon. He is bullish on Amazon's international business and advertising strength.

Economic Indicators and Federal Reserve Policy

• The Labor Department's non-farm payroll report is crucial.
• Kramer hopes President Trump will refrain from criticizing Fed Chief J. Powell.
• Weaker employment numbers are needed to justify potential rate cuts by the Federal Reserve.
• The Fed needs to walk a tight rope, balancing the need for rate cuts with the impact of tariffs on imported goods.

Ulta Beauty and the "Girly Companies"

• A caller asks about Ulta Beauty as an investment for his daughter.
• Kramer notes that Sephora's presence in struggling Kohl's stores could benefit Ulta.
• He mentions Ulta's new management and recommends checking out the Ulta store in Midtown.

Mattel vs. Hasbro

• A caller asks about Mattel as a "best of breed" investment.
• Kramer prefers Hasbro, citing a successful card game.
• He recommends researching Hasbro on Grock to understand its success.

ResMed Interview with Mick Farrell

• Tariff Exemption: Farrell explains that ResMed has a tariff exemption based on a history of relief for people with disabilities, dating back to President Ronald Reagan.
• GOP-1s and Sleep Apnea: Farrell discusses the positive impact of GOP-1s in conjunction with CPAP therapy. He cites data showing higher start and resupply rates for patients using both treatments.
• Growth and Innovation: Farrell highlights ResMed's growth numbers, innovation in products like the Night Owl home sleep apnea test, and strong balance sheet.
• Compelling Investment: Farrell emphasizes that ResMed is a compelling investment due to its experienced management team, innovation, operating excellence, and strong balance sheet.

IBM Analysis

• Initial Reaction: IBM's earnings report was initially met with a positive reaction, but the stock sold off sharply the next day.
• Ben Wright's Analysis: Ben Wright attributes the sell-off to a 350 basis point deceleration at Red Hat, a 9% decline in consulting bookings, and the fact that the headline numbers were saved by a weaker dollar.
• Kramer's Perspective: Kramer believes the sell-off was an overreaction and that IBM is a steal at current levels. He highlights the company's solid revenue beat, earnings beat, margin expansion, and cash flow.
• Red Hat and Consulting: Kramer is not worried about Red Hat's momentum eroding and notes that consulting revenue still grew versus the previous quarter.
• Overall Assessment: Kramer concludes that IBM is a broken stock, not a broken company, and is worth buying.

PepsiCo

• A caller asks about PepsiCo after recent struggles.
• Kramer believes PepsiCo is a well-run company with a 4% yield.
• He recommends starting a position, expecting Ramon Laguarda to make strategic moves.

Gold Miners

• A caller asks about gold miners in light of countries dumping US dollar-denominated assets and buying gold.
• Kramer suggests various ways to invest in gold, including gold mutual funds, physical gold, GLD, or Eagle Mines.
• He advises against being aggressive with Eagle Mines until it comes down in price.

Scotts Miracle-Gro Interview with Jim Hagedorn

• Business Update: Hagedorn reports that business is good, with double-digit sales growth.
• Consumer Behavior: Consumers want promotion, and retailers are using Scotts products to bring customers into stores.
• Martha Stewart Partnership: Martha Stewart is the company's chief gardening officer and is helping the business.
• Retailer Support: Retailers are spending heavily to promote Scotts products and bring people into their stores.
• Cannabis Business: Scotts has transferred its remaining cannabis-related holdings to an independent strategic partner.
• Brand Strength: Hagedorn emphasizes that Scotts is the best brand in the world.

Lightning Round Highlights

• ARM Holdings: Kramer advises holding ARM Holdings, expecting a bounce in the semiconductor group.
• MicroStrategy (MSTR): Kramer expresses a positive view on Bitcoin.
• BHP: Kramer likes BHP's story and yield.

AI Stocks and Nvidia

• Deep Seek Concerns: Kramer discusses the concerns raised by Deep Seek's ability to train AI models using less hardware.
• Alphabet's Endorsement: Alphabet's CEO Sundar Pichai praised Nvidia as a key advantage for the company.
• Data Center Buildout: A key data center supplier confirmed that the buildout is continuing and accelerating.
• Nvidia's Valuation: Kramer believes Nvidia's stock is undervalued, trading at just 25 times earnings.
• Political Football: Kramer notes that Nvidia has become a political football due to trade restrictions with China.
• Broken Stock, Not Broken Company: Kramer concludes that Nvidia is a broken stock, not a broken company, and is poised for a recovery.

Conclusion

Kramer's analysis provides a detailed outlook on the market, highlighting key companies, economic indicators, and investment strategies. He emphasizes the importance of trade deals, earnings reports, and Federal Reserve policy in shaping the market's direction. He also offers specific stock picks and insights into various industries, including technology, healthcare, and consumer goods. His interviews with industry leaders provide valuable perspectives on the challenges and opportunities facing their respective companies. Finally, he identifies Nvidia as a broken stock with significant upside potential.