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tv   Mad Money  CNBC  July 31, 2019 6:00pm-7:00pm EDT

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>> i mean your baseball acumen is incredible. >> it is. >> it is something -- you never cease to amaze me. >> inside baseball, you get it here. >> final trade >> that does it for us see you back h . my mission is simple, to make you money i'm here to level the playing field for all invest tors. there is 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 people want to make friends, i'm trying to save you money my job is not just to entertain but educate, teach you and put things like today in context why don't you call me at 1800-743-cnbc or tweet m me @jimcramer. what happened today.
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the fed gave us what we wanted, the market implodes. dow plunging 334 points, s&p plummeting and nasdaq 1.19% down honestly, there was nothing shocking about fed chief jay powell's statement but people don't understand how the game is played it's insurance and not the start of the easing cycle. that upset everyone hoping there would be a lot of rate cuts galore including those betting the dollar would decline the fed is supposed to be cage gee about this remember the last time powell told us the long-term plans in october, the stock market crashed. promising a series of rate hikes was a big mistake. he's not going to make the same mistake here by promising a series of rate cuts. he's not stupid. of course, president trump piled on how powell let us down. you can say that trump let us down by firing yellen who is
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much closer to trump and putting powell in, and enough powell bashing for heaven's sakes he's on the case as there is plenty of evidence, positive news enough to befuddle some fed watchers that maybe shouldn't cut at all my view, it was time rollback that cut. the increase, i want another if things falter, okay? that december 1, i didn't like that a lot of people do not understand how things work so calm buyers turned panic sellers in rapid fashion and the market got slammed and you know what that's a good thing. it lets you buy the stock of high quality companies at a discount when they are throwing them away because of fear. a lot of people were selling stuff they didn't know what they were selling for heaven's sakes. consider the biggest winners for the incredible month of july instead of crying, when you look at the leaders, you don't find many companies that rally in anticipation of a rate cut you see companies that shine because of good execution and
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strong demand. the ones that don't need the fed are absolutely worth buying. let's start with the biggest winners in the dow jones industrial average and move ton out s&p 500. the best was the stock that leap frog oefged over peers up 7.7%. this is that rare story where conviction trump discipline. on monday i was on the halftime report she asked me whether you should buy the stock ahead of the quarter. i talked about the turnover and the ceo is doing at the helm but i warn you not to chase because the stock had rallied so hard into the print then yesterday proctor delivers spectacular organics up 7% that's staggering for the old fashion consumer goods company struggling to put up single digit numbers for ages we would have been happy with 4% it looked good including the ones like grooming, which have really hurt them turns out proctor deserved to run. the thing went from a blue chip dividend play to a gross stock
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literally overnight. i don't like starbucks we're seeing a lot of these. next up, the wake of good quarter, apple is up 7.6% for july i'll have more to say later. it soared today because it posted a quarter with growth hold apple has a more consistent sticky revenue stream thanks to the subscription based services. you combine that with the strength of the wearables is the real driver of the stock buyers don't care that much about the iphone sales disappointing because the wearables and services are the future investors pay with reoccurring revenue and tim cook is making that transition. it doesn't deserve the same price multiples the before mentioned proctor and gamble that would put this 213 stock. apple should be trading like a consumer package goods company or cable company when you judge it by the same met metrics in the ind ustry,
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it's clear the stock is way too cheap. own it, don't trade it tomorrow a new credit card with the help of the third best performer in the dow, goldman sachs up 7.6%. gold man is pivoting towards more occurring revenue hmodel two. the stock is rallying like mad because investors like fee-based and not trade based earnings it deserves to sell at a higher evaluation i hope gold man is ready for the apple charge card. the fourth best performer is a blast from the past up 7.5%. some of the bstock bouncing bac compressed by last year's mini bear market but most is the beautiful friendship ibm closed and that could spark a return to growth and excitement for this once more abundant stock the run makes sense and 4.3% yield, i would be a buyer. here is intel, the company
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didn't really do much to deserve a rally this month it was strictly a btf situation. better than feared speaking of chip makers, i like amd 10% today relative to the lighter guidance, something you should have expected but still managed to shock people into selling. i hope you watched the interview this morning with the ceo, terrific that's the leadership. how about the more important s&p. it starts with twitter that finished up 21%. with this quarter the company reported the destination choice because it's a choice destination for users. i think this will be the start really of the series of good numbers, buyer and weakness doing a really terrific job. number two is a short squeeze micron up 16%. this is a battle ground stock because it sells commodity semi conductors which prices go up and down and up and down and they were in down mode there was glut coming into the month. if you want to gain micron, you need to predict the supply and
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demand the price of both seems to stabilize sooner than many people thought especially the short sellers. going forward micron i think will be hostage with the trade talks with china and product that people's republic the stock got slammed 5%, i think it could be let's say enticing a couple points lower third is universal health services up 15%. this is one of the nation's largest health care providers and run acute care hospitals and am bar centers and they announced an agreement tofe effective an investigation into the behavioral health facilities that allowed the company to double dividend and add $1 billion to the buy back, which is why the stock caught fire he's a legend in the business, stock is up 440%, s&p up 196 same period. i'm joyous about ups, united parcel up 15%. here is a company plagued by a
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high quality problem they have too much business they couldn't handle. the ceo has been spending and spending now and it's finally starting to pay off. chap cha ching. the yield, i like that discover financial another line i don't talk about up 15%. the market loves these financial technology plays on days like today when riskier stocks which is what the banks are considered to be get slammed. discover is playing catchup to the heavy hitters on the base and you think of these mastercard, america's best when you compare it with no credit risk, discover is a lagger up 25% over the past year, versus 30 for visa, 37% for ma or mastercard over five years. discover gained 62%, visa 249, mastercard 279 and discover got the act together here is the bottom line, when you get days like today where you see the panic people of
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something and try to figure out why they panic and make up a lot of stuff, the hair trigger traders don't know what they are doing. they decided the fed made a disappointing move even though we got what we wanted, nothing more, nothing less looked in the july leaders for guidance and in some cases you'll find some solid buying opportunities. sal in new york, sal >> caller: hello, jim. boo-yah from long island, new york. >> nice area sal, what's shaking? >> caller: first off, i want to thank you for taking my call and thank you for all the tedious research work you do for us that watch your show daily. >> thank you those are the 3:00 a.m. sorry days go ahead i'm sorry. >> caller: we appreciate that. i want to ask your opinion on the ticket gpn global payments it moved to 162 so i added it to my ira. >> you did the right thing i've been reading a lot of lisa
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ellis. she's the best payment person. we both love g.p. and the moving average going to give you a chance to buy more why? because that franchise is so solid and i welcome them back on the show, please they have been doing a lot of good the fed gave us what we expected for heaven sake but somehow traders were disappointed so they panicked. that's the opportunity for you as always but when they go to trade it, apple. "mad money" tonight, the president talked about infrastructure spending and a lot of talk and not a lot of action how is martin marietta able to post strong results? when he have to ask the ceo. you have to be causous in the cannabis base and my breakup break down continues, i'm eyeing contour brands my view on it is going to shock you so stay with cramer. >> announcer: don't miss a
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second of "mad money." follow @jimcramer on twitter have a question? tweet cramer #madtweets. send jim an email or give us a call at 0043-cc.18-7nb miss something head to madmoney.cnbc.com. do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.
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with the market melting down we got the rate cut we expected but caging about promising more. let's not forget what is going right. yesterday martin marietta materials, cement, concrete, use fault reported a truly blogged quarter and surged 10% in a single session how? they delivered a 9 cent earnings beat over the basis. the modest revenue beat but the major development is management felt comfortable enough. the stock is up more than 40%. the business for this year alone is on fire in the midwest and southeast. while washington has been able to pass an infrastructure bill and good news in washington, there is still a federal and
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state money right now to get things moving but don't take it from me. let's check in with the chairman and president and ceo. welcome back to "mad money." good to see you. thank you for coming on. i remember when martin marietta spun it off. i said to myself this is one you don't want to touch. this will be siup and down. 25 years later none of that happened how come >> it's been an incredible steady run for 25 years. we never cut a dividend. we're careful on costs and able to get pricing through different cycles, and really if you look at what is going onrelative to infrastructure, we've been in the right places and being in the right places with the right products makes all the difference. >> i'm glad you mentioned that you are in states that have been better than the rest of the country because some said i hope chairman powell doesn't read how
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you're doing because you're doing much better, but you've also executed in a way that makes he feel like there is a bit of a secular growth here. >> we are in the right place this is our team that performed well i think what you said is right we're principally southeast and southwest business, where people are moving to. if you look at population and state fiscal health, those are the things from our business that make a difference, but we also take good care of the cost side of our business we recognize if we're selling for $15 a ton, we ought to be good at it and we are. >> you did this quarter without basically texas and colorado which are two well-off states because of weather the weather that was bad. >> it was wet in texas and colorado those are our top two states but what we're seeing and you outlined it, what we're seeing in the midwest and southeast helped carry the day and we like
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being in a position we could have a beat as the half year raise guidance for the rest of the year and had the top two states actually hit by weather a lot in the first half of the year. >> i thought that was amazing. the one thing when i was listening to jay powell, i thought residential, how is residential? you've got some great markets for residential, really doing well. >> if you look at national statistics, they are not that overwhelming if you look at the stats in the top ten states and the top ten states are 85% of our revenue. we're out performing the nation whether total single housing or multi housing and multi stayed very, very healthy throughout the cycle. >> i got to tell you, i didn't think much at all of what the federal government just did the other day, but you made me encouraged you seemed to think there could be something there for infrastructure. >> it's interesting. epw, the environment public works committee in the senate came up and are looking for an
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extension. this is coming out of repub connecticco controlled senate. we think it goes to the house. house transportation and infrastructure will come out with their plan likely more than that the issue is going to be this, jim, how will they pay for it over the long term >> they don't seem to care about that lately. >> they haven't but the other thing is we're hearing more and more talk about moving away from a gasoline tax we're looking at different forms of user fees, but moving away from a gasoline tax in the fullness of time is something that states are increasingly looking at and the federal government is going to have to look at, as well. >> i read in your transcript at one point yousay something goo about georgia. how does this work how ocare you ready? for all i know georgia, that's something good or bad but you call it out of something that could be positive. >> here is what we see georgia has basically doubled the transportation spend over the last three years. >> that's incredible. >> texas is at near record levels
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florida is, as well. almost every one of our top ten states over the last three or four years has raised their revenues relative to what they're spending on transportation if we see something come from the federal government, it can be incredibly powerful to our business. >> now, when i hear that, i say to myself, okay, that is not necessarily a reason why powell shouldn't have moved in other words, you're talking about specific events and things that happen in your areas because you pick them and not necessarily that interest rates are low and people are building all over the place the take away from what you're saying should be many you execute well, you can do well in this environment but if you don't, it's entirely possible things won't bail you out. the fed won't bail you out. >> we're seeing markets that are very good and 25% off mid cycle, not peak and we're performing extraordinary well in those
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markets. >> what should happen if you want to continue expansion, some of the states will go back up to levels that you're ready for. >> that's exactly right. and that's the important thing to remember. we can meet the demand that contractors need in those different states we have the capacity to do that. if we look where we were several years ago, last year we were 30, 40 million tons of stone below that. >> and still made that much money? >> still had a good year. >> 810% gain since you came public, which is rather extraordinary, for this company you should be proud because a lot of them have come and gone they don't exist anymore. >> you're entirely right we have an extraordinary team of people they give me the privilege of telling the story and they put up the numbers. >> i say your whole team is good and you're good, too that's the president and ceo of martin marietta. it was one of my big concerns
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for the market i was wrong. the big concern was not buying enough stay with cramer
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three weeks ago i warned you the cannabis stocks became a lot more risky this whole group traded on hopes and traen dredreams and now it' on numbers it didn't match the expectations of the bulls i told you the marijuana space would get tougher going forward but everyone i had no idea it would get this bad this fast over the past few weeks, the group has been crushed with some truly hideous breakdowns most of the group is down seven to 17% since i warned you about the industry i knew wall street was more
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critical of the cohort i didn't know it would deteriorate like this. there is a cloud of pessimism, there was a particular canadian cannabis producer known as canntrust. see, canntrust ran to the regulators and forced to announce it was deemed non-compliant by health canada for selling product grown in an unauthorized room of the facility remember, marijuana may be legal in canada but heavily regulated. executives had knowingly skirted the regulations and misled regulators that's why over the course of the past month, this stock lost more than half of the value plummeting from $5 to $2.35. as the scandal keeps blowing up, the pin action has been horrendous for the rest of the
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group. some analysts are talking about a containment. should you be afraid or face the moment to have an opportunity. we'll start the epicenter of the decline. here is a company that got medical marijuana license in 2013 management claims they make standardized products that allow doctors to give patients accurate doses that's so hard to get and trying to grow weed that's almost as consistent as actual pharmaceuticals that stock has been great because you can dose it. these guys have a big greenhouse across from niagra falls that can potentially produce 50,000 kilo as year they are adding more square footage to double production next year and got a man pack to - manufacturing center that turn plants into finished products. they recently acquired a bunch of land for outdoor cultivation
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that could add 100,000 or 200,000 kilos by next year they were expanding into new categories including over the counter products, natural health care, health and beauty and pet care this was a super growth play they listed on the new york stock exchange in february but after a run up to $10 in march, the stock rolled over and has spent the last four months being clobbered. it lost 75% of the value from it's peak. so they have been a loser for months before the big melt down. they were hardly alone the group is under pressure like i mentioned before but uniquely poor performer they started caring about the actual results this year remember bruce was fired from canape, actual results matter. the numbers have been disappointing to say the least in some of these stocks. canntrust in particular. they reported a short fall in
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the top line and bottom line because of lower pricing for oil products especially. the company announced a 10% price hike, it wasn't enough in april they got a license to expand the main cultivation facility but waiting on approval to start the next leg of the expansion and also wanted to wait for permission to grow weed outdoors in british colombia and produce 75,000 kilos that the a huge increase given they grew in the first quarter all told management was talking about having 200 to 300,000 kilos by the end of next year. you had yet another company talking about the plant productive growth and estimated capacity, though all this was a done deal. in 2019, marijuana investors are sick of plants they want returns. they want results. next leg came down in late april when they announced $200 million
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offering when the stock was trading at 7.52. that was a big slug and the deal priced at $5.50, ouch. that's the context for the recent melt down they admitted expectations needed to be ratcheted down and been guided for the big outdoor farm but health canada hadn't given a permit so management said the real number could be 15,000 for 2019 if they got approval within the next month or closer to zero if the regulators waited until august 5th. brutal that wasn't the worst of it. on july 8th. we learned health canada dealed the facility non-compliant but five don't have licenses yet. health canada charges that the company is growing in those rooms. nearly half the facility and then lying about it. the regulators placed on holdil' sell it until they compile with rules. they said some customers could
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experience product shortages since then the stock is radio active didn't help a canadian newspaper leaked emails showing that executives had known about it. last thursday the ceo was fired and the chairman was forced to resign stock actually rallied 17% on the news another 9% tacked on when the interim management announced the review, they are looking at options including putting the business for sell. there is another big cannabis story next week, a u.s. based company had a dustup with the fda and linked a big deal to sell products also known as cbd but turns out there is cbd lotion and pain relief, cbd vape pen have been deemed unapproved by the fda after initially getting slammed, they managed to bounce back and may need to change how they label the stuff. still, it is clear to the fda flexing the muscle against
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cannabis the fallout from the mishaps devastated the entire sector every stock is down 5 to 20% my view, you need to be incredibly selective here. two best funded canada cannabis players but long-term stories, you need to be prepared to buy them gradually on the way down the bottom line, when it comes to marijuana space, the paradigm means stay away from companies with vague plants pending regulatory approval losing a lot of money stick with the big guns like the prepared for pain and the players with deep balance sheets are scrambling for cover andrew in new jersey, andrew >> caller: hey, big shoutout how are you, jim >> hey, how is it going? >> caller: doing good. doing good listen, i'm going to talk to you about turning point brand, ppb
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i picked this up a few months back, right, and it was in the mid 40s and i knew it had good gains and used to open up canada so i said this is it they make zigzag papers and stuff like that. in canada all they do is smoke and go to comedy clubs the thing is a win, right? >> right. >> caller: i don't know what is going on with it. >> this is a group move. this is a group move, andrew because you're absolutely right. this is a good one and it actually makes money it's got plans, but it's being pulled down. in that kind of situation, i think you got to stick with it doesn't mean you can buy it. you have to wait for the group to bottom. this tape has gotten tough when it comes to the marijuana space, i had to do this piece. i got to tell you because you need to know why things are going down, right? i still think you got to be ready for even more pain much more "mad money" ahead.
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contour brands was spun off in may but is it time to wrangle an investment i'm offering my take then, what's apple stock really worth? i'm doing some back of the envelope algebra and offering my take, your calls and rapid fire of tonight's edition of the lightning round so stay with cramer dto experiencer gthrilling performance. now, at the lexus golden opportunity sales event. get 0.9% apr for 60 months on all 2019 models. experience amazing at your lexus dealer.
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when you're running a big company, 17sometimes the best wy to create value is by breaking up the business. lately it feels like more and more executives understand this. it's why united technologies is splitting into three companies and why dow dupont did the same thing. last night i told you to steer clear of agriculture spin off until we see some stabilization in the ag industry that's an industry that let's just say waiting for a big chinese work it's not just big industrials that realized breaking up is easy to do one of our favorite companies that is really strong. great management, vf corp, the kingpin is north face, vans, they spun off the slow-growing jeans business
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they wanted to be more of a great company. now that the vans brand caught fire with younger consumers, we profiled that many times wrangler and lee through off a ton of cash. it wasn't growing very quickly and it had become a drag on the growth profile even though it's a storied couple of brands so vf corp is a new company. the oddly named contour brands i'll spell it for you kontoor, but you need to know simple ktb for you home gamers. the funny part, while kontoor was a drag, i think it's worth owning as an independent business, as a spin off. it's gotten an icy reception from the market, there is a lot to like when you bother to look under the hood this sounds odd. we're used to hearing about wrangler and lee for years in the latest fiscal year, they had 12% revenue growth but would
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have been 16% if it wasn't for the brands they have been struggling for years. sells are down 7% since 2016 earnings collapsed 2016 the jeans division brought in $480 million in profit. 2019 fiscal year $300 million. wow. some of this weakness was because department stores in north america have been struggling it's the same problem as levis had yet when we talked to chip burg who is terrific some trading under a dollar. let's just say you get it? strategy action. when you put it together, kontoor said 80% of the adjusted revenue is the problems are short term in nature they were temporary. still, they were sick of being dragged down by this troubled division one that accounted for 19% of the company's sells so they spun it off two months ago. nobody is talking about it at all except us. they didn't belong under the same roof with the faster
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growing brands, vans, timber land, north face there is a good reason to own this one wrangler and lee are, as i've mentioned, storied brands, natural licks. if the category is struggling now. the number two jeans company in the u.s. where koontor gets 71% of the sells, lee is a major player in the chinese market, too. the main reason i like koontor is it's not a growth stock that's what vf corp didn't want. kontoor is a dividend stock with 7.2% yield try to get that from a bond that's not too dangerous f. you're an investor who wants income, this one is pretty enticing why is the yield so high in isn't that usually a red flag? well, on the first day of regular trading in may, kontoor closed at $38.60 but since then
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it's been clobbered. the spin off did happen at a terrible time when the trade tensions with china started escalating before the federal reserve indicated a rate cut was underway and plunged to $25 and change and been able to bounce back to $29.33 as of today although that is a decline of 5% from yesterday in the terrible trading. now it's not just the dividend i like kontoor's management team is pretty darn strarightforward. wrangler and lee is quality brands and they believe it can turn things around by focussing on the earnings and then earning the trust of investors on top of the huge dividend, they are planning to expand wrangler and lee into new channels in new countries. at the same time priority number one is to turn the margins around they think they can get there by of tim -- of of tim mincing the
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business remember, not everything can grow 20, 30% and will allow a massive amount of cash to be thrown and higher dividend the company spells this out. long-term targeting 8 to 10% return and 5% for the dividend and created 5% from margin improvement, mod rest revenue growth and management shooting for 60% dividend payout. that means distribute 60% of the earnings i like that. now given how tough things have been in the jean space, the real question is can kontoor deliver? management points to the consistent cash flow look at the numbers and see where they are coming from and from 2008 to 2018, the company generated at least $300 million in cash and peaked in 2015 and in recent years it's deteriorating coming in at $363 million in 2018 so hammered by
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the wholesale customers. there is still ailing. okay they are still ailing. the department stores that we know are the story department stores, let's just say a lot aren't going to make it. these are levels contour hasn't seen since 2010 which is out of the recession. i think we need to be conservative with cash flow forecast until they prove otherwise. when you look at the analyst coverage, they are being cautious and i can understand why. while contour doesn't report the initial quarter as an independent company until next week, they filed for the first quarter of the year and the numbers weren't great. revenues fell and margins continue to slip wrangler was up 4% including the impact of currency, lee was down what we know doesn't bode well for the next quarter however, that was when kontoor declared the massive dividend. too enticing to ignore
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you probably asked jim, is the dividend safe? okay i think kontoor's debt level seems manageable they have two-term loans that come to $1.05 billion and $500 million credit facility they haven't drawn down on yet. how much do they have to make to pay you $224 per share every year that dividend cost $127 million -- $127.5 million. if you think the company can generate 200, $300 million in cash flow, they can cover the payout wouldn't it be incredibly bizarre and inconsistent and nutty for kontoor to have a large dividend and swiftly cut it i did see dow chemical to that once that's about it. you don't have to believe in a miraculous turn around to like the stock but believe management can stabilize enough to reward shareholders and i want management very much to come on the show like chip burg did even
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though levis was down in the dumps. they were almost worthless if you're an income seeking investor and many of you are, there is a lot to like about the stock. i would steer you to he vlevis e what they told us last night i'm betting the dividend is safe and for the stock, may take them awhile to turn things around but the 7.2% yield, hey, come on, they are paying away "mad money" is back after the "mad money" is back after the break. tell him we're flexible. don't worry. my dutch is ok. just ok?in dutch) tell him we need this merger. (in dutch) it's happening..!
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it is, it is time for the lightning round. buy, buy, sell, sell the lightning round is over. are you ready? time for the lightning round laura in texas, laura? >> caller: hey, you had ald on about a year ago they are down 32%, and i'm wondering is there a better lithium company out there are? >> no, the society that chile is
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the best one but we're staying away from alb. how about we go to mary in georgia, mary? >> caller: hey jim, big boo-yah from the peach state the stock i am looking at is colgate. >> you're getting a buying opportunity. the quarter was good, better than i expected. pull the trigger alan in florida, alan. >> caller: jimmy, streaming tv is red hot and growing apple tv is getting ready to come to the dance industry what do you think about them >> rok us up a huge amount i'm in total agreement i think it's the absolute best way to play cord cut i think that people are going to say wait a second, it up 237% and they will panic and i say all right, dave in illinois, dave >> dr. cramer.
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>> dave. >> caller: hey, apart from the andrea scandal, it expanding into the u.s. market it's the pride of spain. it's santander. >> i think they are doing a terrific job but europe is so bad, what i buy four and a quart quart, dave, the 6 to 8% yield but i got to tell you, europe is dead money i do like what she's doing, though in america. david in new jersey, david >> hey, how are you, jim thanks for taking my call. >> of course. >> caller: my question tonight is stimulations plus slp i've been in this awhile at the health care tech play. i like the company for years i'm up about 800% since my original purchase. it had a tremendous year this year. >> it's insane david, look, i got to tell you,
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you know, you hear this sound, you got to take something off the table and it's a huge speck stock and you've won you can't win twice. let's go to tom in virginia, tom? >> caller: boo-yah, jim cramer. >> boo-yah, tom. >> caller: i'd like to talk to you about amron corporations. >> oh my -- go ahead, sorry. okay amarin is one i've not been right on it's a good stock, what can i tell you i keep relooking at it trying to figure out how to have a good informed judgment on it. let's go to mario in california. >> caller: how are you doing mario in california. enphase. >> everyone is asking about it it up 500% and solar play. i don't know why please, guys, in my twitter feed, i get that you want me to talk about enphase, i'm dropping
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[ suspenseful music playing ] [ chanting ] you ready? i'm ready. on my three. ok. [ screaming ] you asshole! woo! [ grunting ] when will apple finally get its due? i'm not talking about the $4 rally in response to a good
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quarter. i would have said the same when the stock was up 8 before they cut the fed funds rate and cut the legs off the market. although i don't think he meant to when i say apple in extension, tim cook haven't gotten their fair share of prize. when will the analyst stop worry about the slowing of the cell phone business and focus on the vibrant service revenue screen people don't understand how to evaluate the new apple just listen to the headlines from the digital "new york times", quote, apple reports declining profit and stagnant growth again end quote which is better than the news print edition that said declining profits again and apple's latest quarter. the "wall street journal" weighs in quoting an analyst, asked about apple's relationship with the nigh niece and says quote it's not a matter of if but when apple gets in china. end quote. the problem with these two stories, how about the fact apple's china's business
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accelerated the quarter and so consistent it got stronger and stronger as the quarter proceeded, there is a tax cut and trade and stuff but hey, it was better here is what you need to understand iphones account for less than half of apple sales and you ignore the revenue stream. that's a stream of the future. it's a stream growing at an 18% clip when you back out of a one-time item and 300 basis points of currency, the dollar is too strong. once again, we see the strong dollar is hurting every amanier c -- american company and that wasn't enough to stop apple. when you throw in the wearables division, apple is a juggernaut. there is tremendous great with apple care, apple music, the ad store, click, click, click for me people keep under estimating the new business model wearables clock in at 50% growth for heaven's sake wiping out the watch business companies can't meet demand for the air pods, that's bad now i'm tires of that.
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between the wearables and service, they racked up $17 billion in sales when you throw in the ipad and mack that had amazing growth the non-iphone business generated $27.8 billion in sells. they will be a larger and larger part of the mix. the dominant part within a few years so why don't analyst get it why do price targets barely budge and anyone upgrade from holds? my theory is these analysts are the same gang that covers the stocks, facebook, amazon, netflix. apple is the slowest grower by far. if they grow at a 1 % clip, that's a disappointment. for the revenue stream, that's a loss my solution, you need to view every hardware sale as like a one-time game. hardware is cyclic l but the subscription business is like a cable company. follow with the tech analyst think about a cable company hits you up for more money every
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month. they have a 99% satisfaction rate they do no favors but saying there are 420 million paid subscriptions. we don't want that how many subscribers, not subscriptions. we need that we need to build models. what's the churn you can find out the lifetime value of the subinstructioscrip. i know this business here is the issue, a tech analyst who covers hardware or software companies won't understand any of this they might not recognize the lifetime value of a credit card holder you can do the streaming, let's say bang k of america if you have 1.4 million people owning it and you know the rate and churn, you can see the price earnings the cable can get or be covered by a consumer product analyst who would view the hand can she
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not scent raiser a firm can do this and plant a flag here but give it to an entertainment analyst and i'm betting the stock would catch fire i don't know how high it will go i put it on the back of the envelope and get $260. take it from someone that knows the subscription business. it will be higher than it is now. stick with cramer. that are unnecessarily complicated. but you're not mad, because you're trading with e*trade, which isn't complicated. their app makes trading quick and simple so you can strike when the time is right. don't get mad, get e*trade and start trading today.
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look, if you own apple because of me and you might because let me recommend it since it was at $5, i don't want that responsibility. i have a solution. read the conference call it's not long. very short questions you'll understand why i say own it, don't trade it i like to say there is always a bull market somewhere. i promise to find it here for you on "mad money.
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i'm jim cramer and i'll see you tomorrow motorcycle cop jorge montero is a man on a mission... - don't make me get my handcuffs, howie. announcer: and he's not backing down. - no deal! no deal! no deal! - i'm freaking out! - oh, my god, oh, my god, oh, my god, oh, my god... announcer: even the banker's running scared. - you have her on the ropes. - good. i'm on the road to the perfect game. announcer: will an unexpected challenge pull jorge over? - do you have the stamina to go for perfection? - ay, dios mío! - this is opportunity right here. - it's my future. i'm ready to make a counteroffer. i'm freaking out. all: [chanting] let's go, jorge! let's go! [cheers and applause]

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