Mad Money 9/19/25 | Audio Only

Key Concepts

• Market skepticism despite record highs
• Speculative stocks and "CRA America"
• Upcoming economic data and earnings reports
• FedEx turnaround and market share gains
• Darden's challenges with inflation and value proposition
• Investing club insights and stock recommendations
• AI's impact on various industries and future potential

Market Overview and Sentiment

The market is experiencing record highs, yet faces widespread skepticism and negativity. Many commentators and analysts are denigrating the market despite its positive performance. The rally is now broad, encompassing banks, transports, tech, utilities, and various market caps. Speculative stocks, reminiscent of the GameStop affair, continue to thrive, which frustrates some professionals. Despite the frothiness, the market continues to climb, defying signals that would typically indicate a peak. Many people are missing out on potential gains due to their negativity and failure to adjust expectations.

• Example: Ollo up 29% after Kramer recommended buying due to government support for nuclear energy.
• Quote: "I think they're winning. And so many wait for the moment when the craziness subsides without realizing that perhaps the only thing that's crazy is the way so many people seem to despise making money in this market."

Upcoming Week's Game Plan

Kramer outlines key events and earnings reports to watch in the coming week:

• Monday: Potential news from President Biden's call with President Xi of China, focusing on topics beyond TikTok, such as Nvidia and trade deals.
• Tuesday: AutoZone earnings, a stock Kramer has recommended for two decades due to its aggressive buyback program. The aging car fleet and availability of YouTube repair tutorials benefit AutoZone. Also, Micron (MU) reports earnings. CEO Sanjay Marotra is known for his prudent approach and honesty, often tempering expectations when the stock soars. Kramer will wait for a pullback before recommending Micron.
• Wednesday: New home sales data. High bond yields and mortgage rates are hindering home sales. Cintas (uniform rental company) also reports, with Kramer anticipating an upside surprise. KB Home reports in the evening, likely facing challenges due to gross margin pressure and high mortgage rates.
• Thursday: Jabil (JBL) reports, a manufacturer of technology components. Kramer expects a terrific quarter due to strong demand. Costco (COST) reports in the evening. Kramer finds it hard to believe that Costco can fall higher from here, but thinks maybe it can.
• Friday: The Fed's favorite inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, is released. The goal is to see data indicating that tariff-related inflation is temporary.

FedEx Earnings Analysis

FedEx (FDX) reported much better-than-expected earnings, causing the stock to jump. The company delivered a healthy revenue beat driven by FedEx Express, up over 4% year-over-year. Earnings were $3.83 per share, exceeding the expected $3.61. FedEx issued its first full-year forecast for fiscal year 2026, projecting 4-6% revenue growth.

• Key Factors:
  • Constructive management outlook on the operating environment.
  • Focus on great customer service.
  • Successful navigation of the removal of Trump's "de minimis" tariff exemption.
  • Market share gains, potentially at the expense of UPS.
  • Cost management initiatives like Network 2.0 (improving pickup and delivery efficiency) and the Tricolor strategy (boosting delivery speeds and profitability in air freight).
• Network 2.0: Aims to improve efficiency in North America by removing stations and reducing pickup times, while maintaining positive customer feedback.
• Tricolor Strategy: Focuses on making the air freight network more flexible, scaling up or down based on demand.
• Valuation: The stock is considered cheap, trading at less than 13 times the midpoint of their full-year earnings forecast, with a 2.5% dividend yield.

Darden Restaurants (DRI) Analysis

Darden Restaurants (DRI), parent of Olive Garden and Longhorn Steakhouse, saw its stock plunge despite mixed results. Same-store sales were higher than expected, up 4.7%, led by Olive Garden (5.9%) and Longhorn Steakhouse (5.5%). However, inflation put pressure on margins, resulting in a 3-cent earnings miss. Management slightly raised the full-year forecast for revenue and same-store sales growth but left earnings guidance unchanged.

• Challenges:
  • Higher-than-expected costs, primarily due to rising beef prices (impacted by screwworm outbreak and tariffs on Brazilian beef) and seafood inflation (tariffs on shrimp).
  • Increased cost inflation expectations for the full year (3-3.5% range).
• Strategies:
  • Focus on value, keeping price increases below the rate of inflation.
  • Offering higher-quality items at a relative bargain (e.g., Olive Garden's steak and shrimp bucatini).
  • Providing price certainty (e.g., Ruth's Chris Steak House's $55 three-course meal).
  • Expanding delivery options (e.g., Olive Garden's partnership with Uber Direct).
  • Testing lighter portion options to cater to customers using GLP-1 drugs.
• Positive Trends:
  • Increased visits across all income cohorts at casual dining brands.
  • Strong traffic gains at Olive Garden and Longhorn Steakhouse.
  • Resonance with consumers seeking value and a place to connect with friends and family.
• Valuation: The stock is trading at 17 times earnings with a 3.25% yield.

Investing Club Insights

Kramer shares insights from the investing club's monthly meeting:

• Waste Management (WM): The stock has been declining due to concerns about housing construction. Kramer considers it a buy at current prices.
• Banco Santander (SAN): A sensational bank run by Anna Boutine. Wait for it to go back to $9 before adding to the position.
• Banks (JPM, GS, MS, WFC): All are good investments, but avoid putting more than a fifth of your portfolio into banks. Wells Fargo (WFC) is seen as having the most potential to go higher.
• Stocks for Teenagers: DoorDash (DASH), Robinhood (HOOD), and Reddit (RDDT) are brand names that teenagers would recognize. Buy them slowly, in small increments.
• Cruise Industry (CCL, RCL): All are terrific, with Royal Caribbean (RCL) being Kramer's favorite. Cruises offer great value compared to hotels.
• Dividend Reinvestment: Always reinvest dividends for partial shares.
• Robinhood, SoFi, Reddit: All have doubled or more since the tariff downturn. Avoid buying back SoFi (SOFI) after selling, wait for a pullback.
• Rate Cuts: Simon Property Group (SPG) and Royal Caribbean (RCL) are both fabulous companies to own in anticipation of rate cuts.

Lightning Round

Kramer provides rapid-fire recommendations on various stocks:

• CMS Energy (CMS): Kramer likes it.
• Mark Electric Power: Warming up to it again.
• Ramico Resources (Coal): Wait for a pullback.
• Accenture (ACN): Willing to pull the trigger at 18 times earnings.
• Opta: Switch to Palo Alto (PW).
• Rocket Companies: Wells Fargo (WFC) is a better play at this point.

AI's Impact on Industries

AI is starting to show tangible evidence of raising numbers for companies.

• FedEx: Using AI for pattern recognition in shipping, leading to cost savings.
• Apple: The iPhone 17 is full of AI, including the center stage feature for selfies.
• Salesforce: Will showcase real AI use cases at Dreamforce, with the Agentics portfolio growing rapidly.
• CrowdStrike: Cyber security business is thriving due to AI agents.
• Banking and Brokerage: AI programs are digitizing and automating tasks, but banks are reluctant to disclose job losses.
• Accounting and Law: Reluctance to use AI due to the mistake factor.

The next generation of Nvidia chips is expected to exceed the capabilities of a thinking person, leading to greater trust in machines.

Conclusion

The market is complex, with record highs juxtaposed against widespread skepticism. While speculative stocks continue to thrive, fundamental analysis and careful stock selection remain crucial. Upcoming economic data and earnings reports will provide further insights into the market's direction. Companies like FedEx are demonstrating successful turnarounds through strategic initiatives and cost management, while Darden faces challenges related to inflation but is adapting through value-oriented strategies. AI is increasingly impacting various industries, with the potential to revolutionize efficiency and profitability.