Mad Money w/ Jim Cramer 1/23/25
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Okay, my friends, I'm just trying to make you a little money. My job is not just to entertain, but to explain how we can have such good days. So call me 1-800-743-CBC. Tweet me at Jim Kramer. The President of the United States is a living, breathing, talking lightning round.

Giving you buys and sells rapid fire. You sure don't know it's a fierce anodyne. Sometimes, of course, they completely contradict each other. Doesn't matter. Wall Street likes the energy, loves the ideas that are coming fast and furious, which is why the Dow gained 408 points today. S&P advanced 0.53%. House of pleasure. But the Nasdaq gained just 0.22%.

This is all new, though. So we have to spend some time talking about how to handle it. This will be an ongoing theme, I think, for four years. But we have no choice. I have to explain to you the way things are being translated from Washington to Wall Street. I want you to stay current and I want you to understand the presidential lightning round. So let me say a few things about what I now believe we can expect from the second Trump administration. Not political, but political.

Money. Economic. First, if you're a trader, Trump's a dream come true. He generates a huge number of catalysts every time he talks. I don't think most people should trade too hard unless you do it professionally, but this is heaven on earth for them. Second, there are analogs. Hey, when Reagan came into office, and of course I was old enough to be trading then, he talked about building a 600-ship Navy. If you bought the defense contractors, you made a fortune.

The difference is Reagan was not rapid fire. He was much more measured. But it's still the closest analog I've come up with. Third, every time Trump talks, it feels like there'll be repercussions on Wall Street. Now, sometimes it's purposeful. Mostly it's to show he's more on the ball than his predecessor. Not kidding. So let's start with today's speech given in Washington and shown in Davos and the subsequent questioning by some executives about what he intends to do on certain issues.

Trump uses speech to frame his presidency. Now, we know he wants to make America great again, or for a given definition of what the word "great" -- that's always going to be his theme. But when he speaks like this, you have to take what he says with a grain of salt. Remember, this is mad money, not mad politics. It doesn't matter how you feel about Trump. It only matters if you can make money off him. That's what we're here for.

Now, I know you could say, wait, wait a second, Jim. What are you like Cal and Steinbeck's East of Eden buying beam futures to profit off of World War One? As I see it, though, I'm just trying to educate you about what's actionable and what's not. The big picture stuff is not what moves the market.

It might excite you, but it doesn't move stocks. Next, the president wants to talk about energy policy all the time. Take advantage of what he calls liquid gold that's under our feet. I know this sounds crazy to those who don't remember what happened during the previous administration of Trump, but the oil companies actually started drilling, they pumped like mad, and it ended up bringing the price of oil down and then really hurting their profits. No, no, no!

Since then, they have gotten disciplined. They're holding back from drilling to keep prices high, and they're making much more money. Many of you might be tempted to grab an oil stock because Trump is so pro-oil, but that would be wrong. As Rushie Brazil, our go-to energy expert, said just last night, the oil companies pretty much operate as a herd. They got crushed last time when they drove the price down by pumping too much. The president wants Saudi Arabia and OPEC to pump more to get prices lower. It's a possibility, but the U.S. controls the price of oil these days, certainly more than the Saudis and OPEC. Our producers are disciplined.

So I don't see the world flooded with crude. Sadly, the drill baby drill stuff is uninvestable for the moment. If President Trump finds a way to get a pipeline built quickly out of the Permian Basin, or if he can help build the liquefied natural gas terminals faster and make it so FERC really loves them, the Federal Energy Regulatory Commission, then we can produce more of the stuff because there's a huge market for natural gas overseas. But it's trapped right now in the Permian Basin.

Permian. Otherwise, from Wall Street's perspective, non-story. But it is why I own the natural gas-oriented code tariff. My chapel trust, though, it's been a winner. But it's natural gases in Pennsylvania. The president did greenlight about what I talked about last night, the return of coal.

All right, now, I personally don't like the coal stocks, but Peabody has the cleanest coal, and Alliance Resource Partners has one of the most lucrative utility coal businesses. Utility coal is what's in play here. It can substitute for natural gas. Natural gas goes too high. The president talked about that. Coal's been losing market share for ages because it's so dirty. Made up over 30% of our energy a decade ago, and it's down to 15%. But Trump doesn't mind. He's not going to do anything.

He likes it. He actually said good things about it. And you know what? We need more stuff to power all these data centers. And coal can work. Those stocks can work. The president talks about how interest rates should go lower. He wants to draw Bone Jay Powell into lowering short rates. Again, non-starter. Trump can't bull rates down. He doesn't control interest rates. They're set by the Fed and the bond market. If Trump really wants to set interest rates lower, he needs to shrink the budget deficit. No amount of hectoring will make any difference at all.

Now today, Trump attacked Brian Moynihan, the affable CEO of Bank of America, for allegedly discriminating against conservatives. Now I have no idea what to do with this one, other than to say it's completely uninvestable. First, I've never heard of it, neither here nor there. Second, Bank of America's good stock. He called for a decline in inflation, but to do that, he'll have to find a way to cut food prices, insurance prices,

Auto prices, auto insurance prices, home prices, health care prices. Didn't hear anything about how he's going to do that. Or not an actionable speech, even as there was plenty of action in it.

Yesterday, however, we got catalysts galore. The president's data center press conference ignited the stock of Oracle, even as Oracle had already pledged to build many more data centers before this. Still, you have to assume for many people this is the first they've heard of that. We had Arm Holdings on a squawk on the street yesterday. It's a company that designs the architecture for CPUs in the data center. They go with NVIDIA's turbocharged GPUs.

But we also had a man on Monday last week, and the CEO, he said pretty much the same thing. So the stock went up big yesterday, and then people realized, wait a second, that's already known, and went right back. But there was one real winner yesterday, and it's one that went down. NVIDIA. If you want to build a first-class data center, which is what Trump's talking about, you have to buy chips from NVIDIA. Because when it comes to AI, they're really the only game in town still.

Now, NVIDIA went up immediately yesterday, but then there was no follow through today because of an outfit called SK Hynix. It's another semiconductor company based in Korea. It reported a set of unimpressive numbers late last night. I think the weakness in Hynix had nothing whatsoever to do with NVIDIA. My conclusion, lots of people got faked into selling NVIDIA off this Hynix story. However, the big data center build out verifies the demand for NVIDIA's products. So it's still worth buying, which was the case at the end of the day. It's still worth buying.

buying. I think we have to expect that President Trump will say something every day that gets a ton of coverage, just like I just described. We need to monitor these statements, but look, we can't expect all of them to generate actionable investing ideas, even if they do produce bullish animal spirits that boost the market. Go buy the S&P. Now, there will be one-offs, coal, Nvidia, Oracle. But for the most part, the energy, the flurry, the change in the guard will simply lead to less regulation. And guess what? When you have less regulation, you don't buy any of these stocks.

You buy the banks. That's what I told members of the CBC Investing Club at my noon club meeting. That's right. You buy BlackRock because it's levered to the bull market at Trump wants to stoke. And you buy Goldman Sachs to make a fortune from all the mergers and acquisitions that are on the way, especially when you no longer have to fear the wrath of Khan. Lena Khan, that is, in the FTC.

Bottom line, Trump wants the banks to succeed and a higher stock market is the badge he craves, even if he's saying bad things about Bank of America. But just because there's a lot of buster, there are only a few tradable ideas. So I want you to do this. Before you pull the trigger, filter things and take advantage of the fact that the pin action for the banks is extraordinary. Mike in Illinois, Mike.

Hey, Jim, it's Mike. Mike, I thought it was you. Great monthly meeting today. Very informative. Thank you. Very structured.

Structured, organized. The catalysts were great. Great. Very informative. Anyhow, I've got a position in Costco. I'm wondering if I should buy, sell or hold additional. OK, as we said, you know, we talked today on the call and our view was that Costco could fall a little more, but it's never going to get cheap. So the answer is, yes, you can buy some here because it is down from a hunt from one thousand one hundred forty two. I would wait to nine hundred, though. That's when I pulled that trigger.

Dennis in New Jersey. Dennis. Good evening, Mr. Kramer. This is Dennis from New Jersey. What part of Jersey? Hackettstown over toward the Pennsylvania border. Oh, OK. Yeah. All right. Go ahead. OK. My question for tonight is about IBM and wondering why they're not participating in

in the Trump election? Well, I got to tell you, I think it's just a matter of time. I think IBM is doing very well. I'm not as close to it as I used to be, but I think IBM is doing well, and it's got a legitimate place when it comes to artificial intelligence.

and compute, so I like it. Hey, why don't we go to Gabriel in California? Gabriel. Yeah, hi, Jim. I'm calling from Lincoln near Sacramento. I found you during the financial crisis, and thanks to you, I've been able to build up solid IRA and investment accounts for our family, so thanks for that. That's what I want. That's what I want. We talk well. I'm happy. Let's go.

My question, given the upcoming merger of Capital One and Discover Financial, and given that financial that Discover is at all-time highs, should I wait for the merger or sell my Discover? Okay, it's a really interesting question, ma'am. And I'll tell you what, Gabriel. At 12 o'clock in my noon club meeting, I recommended the stock. I said that the merger, because it's going to merge with Capital One, is going to be excellent. I was talking to Jeff Marks and saying that we should ask...

add Capital One to the Charitable Trust, so I can't tell you to sell it. All right, listen.

We're going to have to monitor what President Trump says every day, but we can't expect every day to produce actionable ideas. Stop, look, listen, don't pull the trigger. Man, tonight, I'm getting a read on rates and more with SO Green Realty, top brass, special for the company, really nice report. And boy, I love New York. Then what could a Trump White House really mean for oil stocks in the energy landscape? I'm drilling through the details.

and telling you where I stand. And later, I'm circling back on a health insurance player that you called in on, and you know how much we like to answer your questions. I suggest that you stay with Kramer.

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For the past two years, we've seen some incredible gains in the Office Real Estate Investment Trust, including ones we like. This group was left for dead during the pandemic, but over time, people gradually started going back to work. Business made a huge comeback. Take S.O. Green Realty, the Manhattan-focused office REIT with a portfolio of newer, high-quality buildings, especially what's known as the

Park Avenue corridor, the area just north of Grand Central Station. If you've ever been there, it has changed so much. It's really great. Possibly the hottest part of the city right now. So, it's certainly bottom at $19 in March of 2023, but then more than quadrupled, topping out at $82 and changing November. While the stock's pulled back since then, thanks to, look, the interest rates went up.

It's still holding up well in the mid-60s. Now, last time, the company reported a pretty solid quarter, higher than expected funds from operation. The key measurement of profitability, by the way, for REITs. And same score occupancy, 92.5% in Manhattan. Stocks pulled back a little today. I'm thinking buying opportunity. Let's take a look at Mark Holliday. He's the chairman and CEO of SO Green. He had a better sense of the quarter. And what comes next? Mark Holliday, welcome back to Mad Money. Thank you. Thank you, Jim. Great to be back. Okay, I've got to tell you. I'm going to put this so people understand.

Not only has real estate come back, it has come back with an alacrity that I think no one other than you and a couple of other people expected. This quarter, again, was a great quarter. Yeah, it certainly was. And we've been beating this drum, I would say, for almost 15 months now. Because we've seen the dynamic increasing demand, diminishing supply. That really doesn't take a lot to figure out where that's headed. We did everything.

3.6 million square feet of leasing last year. That was the third highest in our 27 years as a public company. And then I thought, this was like everybody was supposed to be at home and businesses were failing. All

All wrong, right? All wrong. Well, everyone just delayed, delayed, delayed. And then it was like, you know, the floodgates opened up. We did 188 lease deals. Most of them, almost exclusively, straight renewals and expansions. Nobody's shrinking. Okay. So we did a little guessing game today.

We were talking about how much one Vanderbilt is worth because you sold an 11% stake in the building and no one got even $2 billion as close to what it was. How is this building worth so much? Well, it's quite possibly, I don't want to, you know, I'm a little biased here, quite possibly the best building, office building in New York or in the country. And that can be a $4.7 billion. It can. It can be higher, actually, because that NOI from that building

is about is going to be nearing two hundred and fifty million dollars of net operating income from one asset which just shows you what can be done in new york city when you when you mix it all the right way right now many years ago i was at dinner where you were at you talked about the idea that if the governor would possibly make some concessions there will be actual conversions happening and they would be terrific i was skeptical but you were right and it's happening right now seven fifty

Park Avenue. 753rd. That's a beautiful building. Thank you. Thank you. I got, you know what? That's another example where private sector, public sector got together, got it right. And now on the slate, 15 million square feet of property

conversions of kind of secondary and tertiary office into prime residential. It's a triple win. It windows up the available office space. It puts critical housing on the table. And it livens up these CBDs, which are dead nights and weekends. Residential makes it 24-7. Well, that makes you feel like downtown. I don't want to get away from your special, but downtown's got a lot of vacancy. You're telling me that as the conversions occur, the street conversions right here, it can just

Pop? Like that. It's conversions with increasing demand. It's like a compounding effect. Right. If you take the top buildings, not the conversions, the trophy buildings, 46 million square feet in Manhattan, in the third quarter, 8.5% availability rate. This quarter, 6.7%. It happened just like that. And that's how it'll be a latent effect downtown, but that's how it's going to happen. Okay, so when we have...

the cars where you got to pay midtown. People are saying that the traffic's down a lot because of it. Affect you or not? Well, I mean, look, it plays right into our strength because

because all of our buildings are right around transit hubs. And that's been our specialty, Grand Central, Midtown, Centric. Everything is off a subway or a primary commutation line. So the more people are taking subway, the better our buildings are because that's core Midtown. A big lease, IBM.

Yeah, well, look, they've only been in the building like less than a year, and they just grew by 35%. Took 93,000 feet, and credit to Arvind Krishnan, IBM CEO, bringing his people back, building space that makes them want to come back in a building that gave him the template for everything he needed. Now, last to talk, what's a fortress area?

Fortress area are those you know those areas around transit hubs that have 24/7 lifestyle people don't want to you know be in dead places they want to be in places where you know they can go out at night get you know great bite to eat as a matter of fact that one Madison which I think is a fortress asset we just opened up with Ted to our great steakhouse I can't wait to host you there see I think that people are

are buzzing about all these places, and they're your places. I am worried if interest rates keep going higher that things could get negative, but that's up to you. You tell me. Well, I got the memo today. Donald Trump said, President Trump said, rates are coming down immediately. Wants them down immediately. So, you know, that'll...

have to see how that plays out. - All I can tell you is that we went midtown, we saw all your names 'cause it's on the buildings. We said these are amazing buildings. This is New York City. The way that the East Park, I used to live at 44th and 2nd.

I now covet where I used to live. It is amazing over there. I know a lot of it is credit to you. So thank you very much. And you really had a big impact on the city. Thank you. Big impact. That matters. That's Mark Holliday. He's the chairman and CEO of SL Green. Come to New York. Go to the east side. There's been nothing there for years other than a train station. Now it's the best place to go and to eat, too. Maybe when he's back after the break.

Coming up, Donald Trump just made energy a top priority. We will drill, baby, drill. Stocks in the oil patch have ignited. But does the move have staying power? Kramer drills down. Next. If your small business is booming, you might say, cha-choo. But you should say, like a good neighbor, State Farm is there. And we'll help your growing business. Like a good neighbor, State Farm is there.

Thank you.

Let's talk some oil because that's what everybody's doing. Only a few days in the second Trump administration like everybody else. I got to figure out what all these executive orders flying around mean for particular industries. For example, the oil service base seems like an obvious winner, right? I mean, think SLB or Halliburton. As the president signed an executive order on Monday, it basically moves Portugal barriers to drilling. Of course, that doesn't mean the producers will just drill, baby, drill, though.

As our go-to energy expert, Rusty Brazil of RBN Energy, explained on the show last night, Trump may want production, and I don't blame him. He wants prices lower. But it's up to the oil and gas companies to actually do the producing. And they know that more supply translates into lower prices.

prices. Sadly, both of the major oil service places, SOB and Halbert, have now reported their fourth quarter results. SOB reported last week. Halbert returned in numbers just yesterday morning. So we've got a better sense of what's happening in this industry because there may be some real value here.

First, let's talk about SLB. Now, it's formerly known as Schlumberger, which is the larger and more international of the two. The stock took off last Friday in response to a strong quarter. SLB posted modest top and bottom line beats. Their North American business delivered the most upside, completely ahead of their expectations. Their larger international business was in line, thanks to some softness in Latin America. But the real story from SLB, as is typically the case, was management's commentary about the future, which I'm going to have to classify as cautious, but not terrible.

One analyst from J.P. Morgan called it better than feared, and that sounds about right, at least to me. CEO Olivier Lepouche, he noted that in the back half of 2024, his customers, meaning oil and gas producers, quote, adopted a more cautious approach, primarily driven by concerns of an oversupplied oil market, end quote. But then he added, quote,

Although these concerns persist, we anticipate the oil supply imbalance will gradually abate, end quote, citing global economic growth and a heightened focus of energy security coupled with rising energy demand from AI and data centers. Yes!

For this year specifically, Lepouch said, quote, we expect global upstream investment to be steady in 2025 compared to 2024. And, quote, for the smaller North American side of the business, he sounded less optimistic, explaining that oil and gas activity is expected to decline due to lower publicly announced capex in U.S. land, higher drilling efficiency, and a slow recovery in gas until LNG capacity expansions are resolved.

Now, the stock still got a nice pop on these numbers in that commentary. Gained 6% last Friday because the results were better than feared. Keep in mind, this is a stock that fell 26% in 2024. But, you know, as I see it, the quarter was neutral at best, especially for the North American side of the business. SLB's already given back most of last Friday's gains this week, and that seems about right after a quarter that was not terrible, but also wasn't particularly encouraging.

So what about Halliburton, which reported yesterday morning? All right. Well, how stock is simply beaten down, having fallen almost 25 percent last year.

It didn't get an SLB-style bounce yesterday. In fact, it lost another 3.6%, and then today it got hit for another 1.8%. Why? Well, Hal Burton had mixed headline numbers. Revenue was down 2% year over year, slightly lower than expected, while the earnings only beat estimates by a penny. Hal Burton is much more levered to North America than SLB, and right now that's hurting them. As North American revenue fell 7%, even as the international business was up 3%. But North America is where the action is for these guys.

Looking forward, Halliburton says it expects flat international revenues in 2025, with Halliburton CEO Jeff Miller saying, quote, growth in most international markets offset by activity reduction in Mexico, end quote. Other than Mexico, the rest of the world is actually looking good for them.

For North America, Halliburton actually sounded pretty optimistic for the long term, but not necessarily for this year. For 2025, Halliburton expects North America to be down low to mid-single digits from last year. That's not good. Miller added that they're taking a real hit on pricing in America. That's even worse. Longer term, though, he's much more sanguine. Miller noted that after conceding and giving those price breaks I just mentioned, Halliburton's now sold out.

With all of its fleets working under committed or contracted programs, good. He also mentioned some new technologies, including Zeus, the company's new electric fracturing pumping unit. That's a fracking tool.

And this is the part that I like best. Miller explained, quote, I believe the next catalyzing inflection from North America's services will be up, not down. I believe the most pressing energy problem in North America today is the power shortage driven by the electrification and power demand for AI. And this cannot be solved without significant amounts of natural gas, end quote. I totally agree with him. He goes on to say, this is on top of the expected increases in LNG exports. These are all very good things for Halliburton in 2025.

Same story as SLB. I think it's compelling, even if it will take time to play out. So then let's ask ourselves, are the oil service plays a good bet under the new Trump administration? My short answer is not quite yet. Could be soon.

Looking at just slob and how, that's what we used to call it, slob on the trading desk, I'm underwhelmed by the results from the fourth quarter and their outlooks for 2025. I'm also tempered by Rusty Brazil's comments last night because getting more production here in the U.S. might not be as simple as drill, baby, drill. A declaration from the White House won't cut it. You know what? I'm going to go a step further. As President Trump's main goal in energy seems to be getting prices down, which would be great for consumers, but as I said at the top of the show, it would be terrible

for the oil and gas industry. Longer term, say over the next four years, I certainly think the oil service cohort could make a comeback. The rollback of regulations will make it easier to drill. Once the oil and gas companies decide they want to drill, it could make a huge difference. Plus, while I think the oil service plays could remain challenged for a while, maybe the entire year, these stocks right now are incredibly cheap. SLB, 12 times this year's earnings, 2.7% yield. Halliburton, 10 times with a 2.4% yield. That said, it's hard to predict when these stocks are going to bottom.

Given how cheap they are, though, I could count on starting a small position now as long as you prepare to go slowly, buy more on the way down, and accept that these are value plays, deep value. Bottom line, the whole oil and gas industry loves to drill baby drill at White House, but doesn't automatically take up the oil service stocks.

or the producers for that matter. After listening to what SLB and Hal Burton had to say over the past week, considering the macro environment and the new geopolitical factors, I think their stocks can work over time, just perhaps not necessarily right now. Still, given how cheap they are, I can't blame anyone for wanting to pick at them down here. Just please, I'm begging you, buy them gradually, because my bet is we'll get more near-term weakness as American oil companies hold back to keep prices high.

And profits robust. Let's go to Dawn in California. Dawn. Booyah, Jim. I'm a three-time investment club member. Yes. I hope you like the talk today.

Thank you. Great. I loved our morning meeting. Thank you for inspiring me to take control of my finances and learn more about investing. That's it. We are trying to teach. We have a menu of stocks. You can choose among them. We're trying to teach you how to identify value, teach you how to do it right. And I thank Dawn for seeing exactly what we're doing. And let's go to work.

Jim, if I can, I would just like to send a huge thank you to all the firefighters working tirelessly in California to protect our communities from the fires. I totally agree. And what a great bunch of people. We've got someone who's a relative in there. And all I can tell you is, is that they are fighting a war. There's a war.

Yes, sir. Jim, three separate times I wanted to pull the trigger on this leading integrated power company. Is it too late? The company is VST, Vistra. You know what, Dawn? I have to tell you this.

It has gone up so, so much. Maybe if it comes down, you can buy a little bit. It is just on fire. I can't count on this buying in here. I'm afraid I'll hurt you, but I do appreciate your comments. And I also think I echo your what you're saying about the firefighters. Let's go to Craig in Ohio. Craig. Hey, Jim, a big booyah from southeast Ohio. Oh, yeah.

My stock is AES Corporation. And my old methodology for utility companies, I've always picked up utility companies like AEP or Southern. Sure. And their yield is around 5%. So this one, as you probably know, yields over 6%, but it can't seem to get out of its way. No. I rode it all the way up to the 20s, and now I'm actually below my cost, which I should have stuck with it. I agree.

Here's what I want to do. I got to get them on because I've got to tell you, when you see a utility yielding 6 percent, does renewables, there's something very wrong with it. And I'm going to say don't touch it.

Let's find out more about AES. It is out of whack with the rest of the utilities. All right. After hearing what Halliburton and SLB had to say over the past week, you know, I think their stocks are going to work over time. I want to do some value stocks, not just the visitors, not just the constellations, some things that represent real value and how an SLB do that. Now, we've got much more money ahead.

creating my look at another interesting stock that you asked about, called Alignment Healthcare. Does it deserve a spot in your portfolio? Then what should you make of the latest headlines about tech billionaires? I'm breaking down the action intersection of Wall Street and Washington. Of course, all your calls are rapid-fire in tonight's edition of the Lightning Round. So stay with Kramer. Thank you.

Every time you call in and ask about a stock that I either don't know or haven't looked at in a while, I put it to the side and promise to do some homework before coming back to you with a more informative opinion. You deserve that. For instance, last week, Bruce in California asked about a company called Alignment Healthcare. Now, that wasn't on my radar screen at all, which is why I said I'd get back to him. So before Ernie sees me and goes into a fever pitch, let's get this one.

What exactly is Alignment Healthcare? This is a health insurance company that makes its money in the Medicare Advantage space, primarily operating in California, but also North Carolina, Nevada, Arizona, Florida, and Texas. Young company. Under Medicare, senior citizens have two primary choices for health insurance once they reach the age of 65. Not that I would know.

They can either enroll in a traditional Medicare fee-for-service administered by the government, or they can make a Medicare Advantage plan run by a managed care company. Look, I'm not a health insurance expert, but I know that Medicare Advantage is a great business. People are living longer than previous generations, and our lifespans are only growing. According to the Census Bureau, roughly 10,000 adults become eligible for Medicare every day.

In 2022, we have 57.8 million senior citizens. By 2023, we're going to have 71.2. That's incredible. Seniors aren't going anywhere. They're going like weeds. Weeds that need government-subsidized health care.

From Alignment Healthcare's perspective, this is an $826 billion market opportunity. That's one of the biggest I've ever heard. That should grow by 7% annually over the next decade. That's a dire projection. But if you're worried about the budget deficit, but not if you're running a Medicare Advantage plan. I've been covering this about the government running this deficit, and I'm very worried about Medicare. Now, Alignment Healthcare is a company with an agenda.

They think our legacy health care system is a disaster. It's broken because we pay health care providers based on the volume of services they provide rather than the quality of care.

With their Medicare Advantage plans, they can do things a little differently. There's a reason so many senior citizens have been switching from traditional fee-for-service Medicare to privately run Medicare Advantage plans. More than half of eligible seniors have already embraced these things. So not the most exciting business in the world. There's no mention of artificial intelligence, nuclear energy, driverless cars, quantum computing, or even space.

But if you just look at how the stock is traded, this is up more than 200% from its lows last April. You think alignment must be some kind of a meme stock? This thing's been rallying like crazy, and it kept running even at a time when the rest of health care has gone out of style in the Wall Street fashion show. You don't see a lot of those stocks moving.

What in the world's driving this one? OK, to give some of the analysts credit, there was a fair amount of interest in alignment health care before its stock began its meteoric rise. There was particularly exuberance around alignments technology platforms, AVA, that helps companies identify and proactively manage care for sickest patients. By using advanced analytics, they can deliver personalized care and prevent costly hospital visits. That gives it a leg up on the competition.

Now, Alignment Healthcare began its impressive rally at the beginning of last May when the company reported a tremendous quarter and issued strong guidance. The analysts were impressed by Alignment's ability to scale its business efficiently, noting that its sales to general administrative expenses are approaching levels comparable to much larger competitors like Humana. As noted by analysts at Baird, Humana is 45 times larger than Alignment in terms of revenue, so it's remarkable that Alignment achieves similar cost efficiencies.

Now, October was the pivotal time for the space, as that's when the Centers for Medicare and Medicaid Services released their new star ratings, which led to analysts filtering these Medicare Advantage plans by stars online to see if they could get some early intel before the formal announcement.

But when those results were finally released, it turned out that Alignment Healthcare did pretty well. The primary Medicare Advantage plan maintained its four-star rating, and their second biggest plan increased from three to 4.5 stars. That's very hard to do. Why do these ratings matter? Because Medicare Advantage plans that maintained their ratings last year, they grew enrollment by 19%.

versus only 3% enrollment growth for the plans where the ratings declined. It's real bad if your stars go down. This momentum continued later that month when Alignment reported a terrific third quarter, better than expected, for both revenues and membership growth. That gave the analysts confidence that this company could convert its new members into durable earnings growth this year. Now,

Earlier this month, Alignment reported impressive annual enrollment period numbers, beating analysts' expectations, solidifying its position for the new year. The company's tech-enabled Medicare Advantage plan continues to outperform competitors struggling with lower star ratings and regulatory changes. They've also doubled their membership outside California, now serving roughly 28,000 members beyond the state. It's a little company, which now makes up 14% of its total base.

This kind of execution has earned alignment a lot of praise from analysts who believe it's well-positioned to continue to take market share. The company also benefited from some of the struggles of the larger names in the space, which I've talked about before. Yet, this has not been a great time for UnitedHealth or Humana. So that's how we got to where we are today. How about the future?

How do you value this thing? Well, as prospects are looking bright, you should know that alignment still isn't profitable on adjusted earnings per share basis. I don't like that. And I expect to be profitable in the near future, but we like to recommend profitable companies. It's basically a small early stage managed care play. On the one hand, I wouldn't be surprised if alignment could keep beating the estimates. But after the incredible run in the stock, it's basically priced for perfection.

For example, the analysts that cover the name like to value the company based on its enterprise multiple, its enterprise value divided by earnings before interest, taxes, depreciation, amortization, or EBITDA. And using their content assessments for 2026, Alignment Healthcare trades at nearly three times the level that Humana does. I don't like

that. Tall order. And something to keep in mind when investing, even when you really like the prospects of a business, is growing like weight. Plus, let's not forget, if you want to bet on a company that only does Medicare Advantage plans, you're totally hostage to Washington. If somebody in the Trump administration gets it in their head to shrink the budget deficit by controlling Medicare spending, this entire group is toast. I know it's very hard for our elected leaders to cut Medicare. I mean, like, really hard.

It's not popular. But someone like Elon Musk doesn't have to care about the electric if he's empowered to. And if so much as mentions Medicare cost savings, Alignment is going to roll over. Bottom line. Right now, Alignment Healthcare seems like a promising company. They're clearly very good at what they do. But I think it could be a tough stock to own given how much it's already run. In other words, we're late to Alignment. We have money is back after the break.

Coming up, lightning doesn't just strike twice in Kramerica. Booyah, Jimmy Choo. Booyah, booyah, booyah. Thanks for taking my call. It strikes every day. Kramer is back in a flash with your questions. Next. It is time. It's time for the lightning. We're going to play this out.

And then the lightning round is over. Are you ready? I want to start with Carl in New Jersey. Carl. Hey, Jim. Is SoundHang AI a buy or sell? Okay, this is a meme stock, and they kind of get it going. I'm never going to get in the way of a meme stock because you never know how high they can go. Let's go to Paul in Ohio. Paul. Hey, another big Buckeye Booyah to you, Jim Kramer. I like that. Good Booyah. What's going on?

Hey, I'm a club member and I just wanted to thank you and your staff for everything you guys do. Thank you. Thank you very much. Oh, you're welcome. Hey, I'm calling about Lamb Research. That stock is so cheap. Oh, I want to buy it. I want to buy it. We have so much semi in the travel trust, but that stock is the cheapest I've seen in a long time. I really like LRCX. Let's go to William, New Jersey. William.

Hey, Jim, long-time viewer. I have a question about a stock that's been on a nice front of late. It has a nice dividend. I'm talking about ETG. What you think? Oh, my God. It's my absolute favorite of the group. I think you just got to just stand there and buy it. It's cheap. It's got a good yield. And its business is fabulous. Thank you, Rusty Brazil, for pointing that one out for me a long time ago. I need to go to Joseph in North Carolina. Joseph. Hey, Booyah Jim. How are you doing? I am doing well. How about you?

Wonderful, wonderful. Congratulations on your Eagles. I'm rooting for them all the way. Well, we got to hope. We got to hope. We got to stop Jaden. If we stop Jaden, we win. It's just that simple. What's going on? Yes, sir. Well, I'm a second-time caller, long-time listener. I talked to you about a year and a half ago when I told you that I had sold my NVIDIA and made about $300,000 on it.

Yes! Yeah, I love NVIDIA. I turned around and I invested that money in a company called CrowdStrike, which I know you're familiar with. Yo, and that one's going hard. We're going to anniversary the July outage. Don't forget. And then it's going to fly. Okay. Yeah, I know. That's the thing. And I implored one of your principals. You know, I had 2,500 shares of CrowdStrike.

And I waited for earnings out in May and sold 1,500 shares at 382. And then, of course, the debacle happened in July. And I wound up selling the rest. Double down. Double down on that one. So what's one that we can work on right now?

Well, I've started reacquiring NVIDIA, and that's my question for you. So I love NVIDIA. I'm back to 2,900 shares. But while I was researching NVIDIA, a couple of weeks ago, a company came across to me that was very interesting. I noted that NVIDIA had taken an investment in it. It's got a balance sheet of $3 billion, low debt-to-equity of less than 5%, less than $10 billion market cap, short shares are less than 3%.

And it's on NVIDIA's preferred partner list. Innovative AI company, multifaceted. And it's a company called Nebius, ticker symbol N-B-I-S. Nebius? I don't know Nebius. I've never heard of it. That's terrible. I should have heard of it. Well, you know what? I'd rather just own the fact that I don't know it. I have to do the homework. Let's go to Rich in New York. Rich. Hey, Jim. Hats off to you and your staff.

They're the best, aren't they? They're amazing. What's going on? Hey, and go Bills. Oh, yes, geez, absolutely. We just have to stop getting tired of saying that. All right, Jayden Daniels, I have a guy here who's going to come to the game with me. He's threatening to wear burgundy. And I told him I'm going to pour a bottle of burgundy over his head. He does that. What's going on?

Well, Jim, hey, this stock's been a loser since we bought it back in June at $139. It's now around $121. Most analysts are bullish on it. Piper Sandler has a price target of $193. The average price target is $173. Profit margin of 47.6% and a dividend. What's your thoughts on CHRD?

Now, I'm not an oil guy here. I mean, you know that in the club, we know we're selling our Kotara. Now, let's hit 30. We think it can go still higher, but we don't want to add. Jeff Marks and I talked to the club. We're not adding any more oils. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.

Coming up, is The Apprentice Oligarch Edition already at risk of being canceled? Kramer talks the billionaire battle heating up on Pennsylvania Avenue. Next. Booyah, Jim. Your integrity makes you the booyah saint of Wall Street. Booyah, Jimmy Chill. Booyah, Jimmy Chill. Booyah, Jim. That's a lot of booyahs.

We're not even a week into Trump's second term, and we're already seeing discord among the billionaires. These oligarchs don't play for dinner. The White House needs to keep them in the game. Already some of the billionaires are starting to leave. There has to be some discipline among the players that things will resolve before they can accomplish anything positive for the stock market.

I'm talking about this high stakes game for the nation. Let's call it the Titan Apprentice that President Trump's in charge of. But there's no prize available that's big enough to keep these participants playing. As a former judge and celebrity apprentice, I know the drill. Like any successful reality show from The Apprentice to The Traitors to Survivor, you need some real competition. You need the backbiting. And you need prizes. Everyone has to stay motivated.

That means you need to see Elon Musk go off on Sam Altman from OpenAI. You have to wonder whether Sasha Nadella is being blown out by Larry Ellison. Great stuff there. You need to see some of the photo op CEOs pop in and pop out. Trump needs them. Maybe it'll help when Davis is over, get some more players playing.

But what you can have is people leaving the game entirely. When Vivek Ramaswamy, the weaker half of Doge, departed for Ohio without saying a word, that wasn't cricket. We heard today that he clashed with Musk. He could have stuck around a little more. Come on, but why bother? When you're a billionaire, you don't need to put up with the hassle. He reminded me of one of my times as a celebrity apprentice judge when one of the contestants, Gene Simmons, yeah, the kiss guy, he blew up the contest for God knows what reason, but he didn't even get fired. He just left.

He didn't need to stay, see, because he was rich. The others needed the prize to restart their careers, but somehow kissed everyone out of style. Right now, Trump's having the same problem, corralling and motivating the billionaires. They need some reason to roll up their sleeves beyond just access. Take those.

We know Elon Musk's team can come in and figure out why the drug middlemen keep making more money than the drug companies. Given that pharma companies actually do the innovation while the middlemen just get a bigger and bigger cut, you need an outsider to come in and shine a light on this darn thing. Take defense spending. Right now, the military spends a fortune on hardware, but that spending is incredibly wasteful because we've got this oligarchy of five large defense contractors that control the entire industry. That's why we need someone like Palantir.

I get a solid gang of billionaires to run the procurement system, not just update the software, suggest management skill changes like their Accenture or McKinsey or something, but only the richest man on earth can make that happen.

What if Musk gets bored? I mean, sure, Starlink needs government help to take big telco contracts. Tesla needs Trump to greenlight the federal interstate highway system as his designated hands-free self-driving zone, including maybe for trucks. Nice price there. But maybe that's not enough. At the end of the day, it's hard to get the richest man in the world to do something he doesn't particularly want to do.

We need more big prizes or more commitments that can't be broken. And we need them now or none of these initiatives will amount to anything. So, Mr. Trump, keep them in the game. The billionaires can get something done. Business as usual means more money ill spent while entrenched interest dig ever deeper. There are a lot of things going on that you may or may not like. But the one show that can't be canceled, cleaning up our country's heinous balance.

balance sheet. We got a unique chance to pull it off here because the billionaires genuinely don't care about upsetting the big defense contractors, the drug middlemen, even perhaps maybe Social Security or Medicare, the dreaded entitlements that are eating us alive. But you got to keep these guys motivated. So I hope the president's pulling out all the stops here to keep the game riveting for the billionaires. Like I said, there's always more work to do somewhere. I promise you I'll find it just for you on Your Mid-Monday. I'm Duke Grammar. See you tomorrow.

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