Mad Money w/ Jim Cramer 5/16/25
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I don't want to make friends. I'm just trying to make a little money. My job is not just to entertain, but to explain how it works. So call me at 1-800-743-CBC. Meet me, Jim Kramer. The market, it continues to put its best face on possible. The gift of trade peace with China. Today, Dow gaining 332 points. S&P rising 0.7%. NASDAQ advancing 0.52%. Thanks to the absence of new tariffs,

some gigantic tech quarters in the Mideast, and some really very positive reactions to surprisingly good quarters. So we've got to ask ourselves, can the bullish procession continue?

And maybe will it matter that after the close this very evening, Moody's, the important rating agency, downgraded the U.S. credit rating because of our government's debt increase. Now, the latter is a real wild card because we all know already, you and I, that we have way too much debt in the country. I'm not sure it will even matter, even as it should. But when it comes to business fundamentals, it's going to dazzle society.

Something that's going to happen Sunday night. We got to talk about that, even though I have to. You know, I don't want to glaze over this Moody's downgrade. You know how we are. We tend to focus on what's going to happen next. And what's going to happen next is that Jensen Wong is going to give the Computex keynote speech and it's going to come next.

Sunday night. Now, I'm hearing there's going to be some dazzling new products and ideas. This speech will be online, streamed at 11 p.m. Eastern. Now, I can't figure out whether to watch it live or the moment I get up, but I won't dare to come to work without knowing

what Jensen is saying. Now, we know NVIDIA stock rallied 16 percent this week and is now safely back above the $3 trillion in market cap number. That's the beneficiary of a huge bevy of orders from the Gulf monarchies. By the way, they have a lot more core weave than we thought. And that stock took off today. Now, I wouldn't be surprised if NVIDIA has more room to run, particularly because there are a lot of people who felt that it should never been at $3 trillion in the first place.

and they've been proven wrong. Next up, analyst meetings are often very dry affairs that are informational but not actionable. That is not the case, though, when J.P. Morgan, the largest bank, speaks on Monday. Their analyst meeting moves, well, I'll tell you, it moves stocks, especially when CEO Jamie Dimon gives his somewhat jaundiced view of the world because, well, he's somewhat jaundiced. He may be a tad saturnine, too, while I'm at it. Monday also is the first day when Capital One,

The credit card bank trades as one with Discover Financial as the deal is now closed. Now, I've been telling people, members of my CNBC investing club, that Capital One is my favorite stock right now in the Chappell Trust, even as it just gained almost 20 points this month alone.

I think the move is far from over. I expect number bumps and analyst upgrades. You've got to learn the Capital One story. Now, not that long ago, we dropped in on a Monster Home Depot store management meeting in Vegas, where we heard about some great ideas for spring gardening season, which, by the way, kicks into overdrive this weekend.

Fortunately, these big weeks for lawn and garden have been overshadowed by stubbornly high interest rates and no rate cuts from the Fed, not to mention tariff worries. Now, I've watched this stock since it came public, and there are plenty of times that Home Depot doesn't actually march to the tune of interest rates, but instead is levered to repair and renovation. As so many people are stuck in their homes, unwilling to trade up because that would force them to give up that low mortgage rate that they may have gotten during the COVID period.

Now, we own the despot for the Chapel Trust. And while I'm not expecting a blowout by any means, I like it long term. And it's down 2% for the year, well off its highs. By the way, Lowe's is attractive, too. They report Wednesday morning. Both are excellent operators, although Home Depot is more about professionals. And Lowe's has more of a do-it-yourself customer base. Home Depot stock is a great one to own because, like Walmart, these guys have the scale to cope with the pandemic.

with the tariffs that are going to be put on so many foreign-made goods that they sell at Home Depot. The little guys, we know they don't have that kind of flexibility. Hey, one thing is for certain, nobody cares for the homebuilders. This group's been down so long, it almost looks up to me. Consider the case of Toll Brothers, the highest-end homebuilder. Toll reports on Tuesday evening. I think the numbers are going to be real darn good. I think the stock should be able to bounce. The chart looks terrific. But the company will most likely have to be restrained with its guidance because there's still pervasive sense of negativity out there.

At seven times earnings, though, I think you want to own this one, even if their forecast isn't a thing of beauty. Yes, I know. When it's seven times earnings, that means it probably will not have higher forecasts.

Maybe it's just time to pull the trigger on some. Now, the Chapel Trust also owns Palo Alto Networks, which reports Tuesday night. This stock is in an odd habit of going down, just no matter how good the quarter is. And they're almost all good. So you might want to wait until after the report if you want to buy a cybersecurity company that is very high quality. Now, speaking of going down after a good quarter, the worst offender of all might be TJX.

which oddly may be the best of the retailers right here. TJX Forever, a holding of the Chappell Trust, buys excess goods from merchants who need cash and then marks them up and sells them to you at what's still a huge discount. Now, I've gone twice this week to my TJ Maxx. I'm just looking for who knows what. I like to go there. I'm looking for bargains like you. How about a flyer? How about VF Corp? Now, listen to me. The apparel company fumbled last time. I get that.

But CEO Bracken Darrell, you may remember him from Logitech, he's a great operator. I bet he's too competitive to let a second debacle happen. Might be worth taking a position and building it in any weakness. Finally, there's the most problematic of retailers of all right now, and that is Target.

Now, this one's experienced a sharp downturn, totally out of step with the company and with the CEO of Brian Cornell. Target's been luckless, a victim of protests that hurt the business. Can you buy it now knowing that the stock sports a 4.5 percent yield? My fear is that Target reports an OK quarter, but then says it can't offer a forecast, at which point you're sitting on a dead waiter. Now, let's say let's say you put a gun to my head and ask me whether you should buy it or sell it. I'd say, what are you doing with a gun in my head?

It's too hard. Also Wednesday, we are from Medtronic, and I like this medical device powerhouse, but the stock's been inconsistent, even as the numbers tend to be pretty darn strong. That means it's hard to game. Another one I got to say, wait and see. Now, that's not how I feel about Snowflake, though. The data storage and analytics company with the business that is on fire.

Last quarter was terrific. I think this one will be, too. Oh, and don't forget, Jeff, Marks and I, well, we've got our investment meeting. We do our investment club meeting once a month. And we have a new idea. I hope you tune in. We're tackling a lot of stuff.

You should join before the monthly meeting. Now, if you're looking for an apparel company that keeps delivering, delivering, I suggest you look no further than Ralph Lauren, which is captained by Patrice LeVay, a man with both excellent taste and the intelligence to tell the story to every age group. Ralph Lauren reports Thursday morning. I buy this one ahead of the quarter, too.

Now, we've got a bunch of controversial ones coming on Thursday. Intuit is a stock that's been all over the map, but the company's a godsend for small business owners. The stock's expensive here. I think it's worth it. You want a company that's in a suddenly red-hot segment of the shoe business? Look at Decker's. Think about this.

Think about what's happened to shoe business. First, we get Skechers gets a bid to go private. Huge win. Then we got this spectacular quarter from On Holdings. On top of that, Dick's Sporting Goods pays almost twice the price to acquire Foot Locker, a remarkable bid. So last time, Deckers, which owns Hoka and Uggs, reported its first disappointing quarter in ages, and the stock was just clogged. Hoka was incredibly strong, though.

Uggs didn't have enough inventory, so there was no blowout and the stock got crushed. These guys are excellent operators, though, so I don't think that will happen again. I'm inclined to be in favor of Decker's ahead of the quarter here. Now, we've been on a real rebound since the post-Liberation Day meltdown back in the last first week of April, with tech leading the way after really taking it on the chin.

I don't know if that will continue as there's a dearth of news coming from tech, except for that Jensen keynote. A lot more retail next week. But here's the bottom line. Unless we get news of new hostilities in the trade war with China, I think this market's propensity will still be to go higher, even though we are overbought.

And even with this late night credit rating downgrade of the U.S. debt, which is very quizzical to me, I think we're containing the downside of the economy. And that means no recession, which tells me the negativity may be out of sync with reality. That's often the best kind of market. And I'm going to talk more about that later in the show. Let's go to Rod in Florida. Rod. Hey, Jim, how you doing? I am doing well, Rod. How about you? Great. First time, long time.

Excellent. For the stock I'm calling about, I've owned for 15 years. I took your sage advice like I always do and sold half of it when it doubled. I've got a 600% gain in it, but it's down 50% in the last six weeks and crushing my portfolio. What the heck do I do about my UnitedHealth?

Okay, we got the first good news in UnitedHealth since all these problems have come about, and that there was a lot of insider buying today. So you have to ask yourself, why would they buy if they felt that they were going to have a big problem with the Justice Department? That made me feel like that maybe the heat's going to be off it for a little bit, but I

I am not happy with UnitedHealth, and I would sell, I would use strength to sell even more. Why? Because we got to find out about what Justice is going to do, and even the insider buyers may not know what they're going to do. Justice is what I call a wild card. Will in North Carolina. Will. Hey, Jim. Thanks for taking my call. Of course. As someone who just graduated college and who's looking to add something to my portfolio that's a little bit off the tech side, I

I was curious if you would reaffirm your buy rating of Visa from a few months ago. Absolutely. I think Visa is sensational. By the way, just so we know, I don't want to slight Michael me back. Visa and MasterCard are both great. MasterCard is actually growing a little bit faster, but they are both fabulous companies. We owned one for the Chapel Trust. It made us so much money. We got greedy. We fell. And then all it did was go up further.

They're both terrific stocks. Now look, unless we get some negative news on the tariff front, I think the market could continue to march higher next week. On Mayabuddy tonight, Ken Dutch Bros, long one of my favorites,

Stay caffeinated after this post-earnings rally. I'm pouring through the numbers with the coffee chain CEO. Then I'm seeing if long-term growth is still on the menu for a stock that you and I both know I like a lot, Kaba, despite the stock sliding in yesterday's report. Don't miss my take on the company's path ahead. And later, I'm digging into how the current economic landscape is shaping waste management company Republic Services. Good read on the economy there, too. So stay with Kramer. Kramer.

Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.

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Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson Report.

Even in a volatile year like this one, we've got some big winners. Take Dutch Bros, the Oregon-based coffee chain that you know I like. It's up more than 40% year-to-date. Now, I've been telling you to buy the stock of Dutch Bros for ages, and sure enough, when the company reported last week, it delivered yet another great quarter, sending the stock up 8% the next day, and it just keeps running.

Even here, though, it's still down 15 percent from its highs back in February. So can we expect this momentum to continue? Let's check in with Christine Barone. She's the president and CEO of Dutch Bros to find out more. Welcome back to Bad Money. Jim, thanks so much for having me. And congrats on your 20th anniversary. Well, I know. And I've got to tell you, first, I just want to start that with drink one for Dane, because I think sometimes we have to start with the good things that we get to them. Just tell us about that, because it means a lot to you and it means a lot to everybody.

Well, thank you so much. We're celebrating an important anniversary ourselves. And we have three national givebacks that we do at Dutch Bros every single year. But the most important one and the one that really represents our culture is Drink One for Dane. It's in honor of our founder, our co-founder, Dane Borsma. And he really set the culture for the company. We have had this and we raise money for the MDA every year to fight ALS.

in honor of him and what he created in Dutch Bros. Well, I'm glad you brought that up. We rang the opening bell today for ALS awareness, and I just think it's something that we're just not making progress in. So I thought it was important to point that out. Now, you had another incredibly impressive quarter. You're still doing expanding infill in some big states. I noticed, for instance, Florida and Texas, you have more stores in Texas than you already have in California.

Florida, you don't have enough. What's the process for the rest of the year about being able to expand in these places?

Yeah. So we are continuing really to grow across the country. So we'll add more in Texas. We'll add a lot more in Florida. We'll continue to add in California and in many of our states. And we are opening in some new states as well. And so might see us someday soon in Indiana or Georgia or some other states as well. So how does paid advertising work when you have so few, say, in Florida, but, you know, you want to start drawing people out because it is.

I had always known Dutch Bros as word of mouth. But I know that when you do paid advertising, you do extraordinarily well.

Yeah, so what we're really doing is targeted paid advertising. So you're not going to see us on a big national stage. But we are looking for folks who are going to want to become our customers and really just to introduce ourselves and introduce the brand. And then our goal is to introduce ourselves and then to hopefully get them into the Dutch Rewards Program. Now, the Dutch Rewards Program has been growing incredibly well. But what I find most impressive is you don't have a lot of people who go to Dutch Rewards.

who are not members. I mean, it seems like the highest ratio of customers who have members to non-members that I've ever seen. Why is that? How is that possible?

Yeah, so 72% of our transactions are with our Dutch Rewards members. And I think as you share, that's truly impressive given how quickly we're growing. And so we do have a focus on getting our customers into that program. It provides them that extraordinary value that they keep coming back to us. It allows us to tell them of things going on like Drink One for Dane or a day that you can come in and get a sticker or a special rubber duck.

And where do you think you're getting your customers from? You've got these, the innovative drinks this quarter didn't seem to me to be like you'd be taking share from a Starbucks or from a Tim Hortons. These are almost like they're just brand new customers that have nothing to do with traditional coffee drinking.

Well, I think every single year you have a lot of new customers coming into the beverage market. I also think in general, we're expanding how many types of beverages we drink. We are unique in that we have that very strong afternoon business. So really creating that new occasion in the afternoon. And so I think a lot of what we're doing is actually growing the market.

Now, of the kinds that I saw this, the new ones, the offer, the limited time offering, it didn't seem like there's loaded with caffeine as I like. I mean, are you developing a sense in the afternoon? There's some people who don't want to get, you know, they don't want to get really tanked up. They just want to have something that's sweet and fun and a nice break.

Well, I think it's what we do have is we have a variety across our beverages. So you can get the 911, which helps get you amped up. I'm actually drinking a tiger's blood soda right now that doesn't have any caffeine. And I happen to have it in the afternoon sugar free.

Wow. I don't know if I'd like that. But to each his own. Now, it's strawberry, coconut. It's really tasty. OK, I like it. That may be something I want to go with. Now, I got to ask about tariffs because people are worried about costs. And yet I don't see really anything that would worry me. I know that El Salvador, I know you've got some other places that you get your coffee from, Brazil, Colombia. What are we thinking here about about having to raise price because of tariffs?

Yes. We're really focused on our value proposition. We before the tariffs, we've actually seen a very significant cost overall increase in the coffee market and in those C prices. So we've been planning for that for quite some time. And our plan is not to pass that on to our customers and to keep our great value proposition that we have for them. Well, you definitely do. Now, how much is a sweet cereal sip or brownie baguette?

batter mocha and birthday cake latte because those sound like the kind of afternoon treat that I can get into.

Well, those are all wonderful drinks. Those are some of our LTOs from Q1 and just did fantastically. I really love the brownie batter mocha. Our chocolate milk was part of our founding and just one of those amazing drinks that anything that has our chocolate milk on it is fantastic. All right. So, Christine, right now, are you trying to cook some things for the third and fourth quarters? I mean, are you working right now for those?

We are working on those. We're even starting to work into 26. You know, as we think about it, we will have pops of innovation. We did on April Fool's Day, we did a little Pickleback Rebel and it just popped in for three days.

But that was a lot of fun, so we'll do things like that. But we will also do longer-term innovation. And so really thinking through where might customers be going, what are they looking for, what do they want from a refreshment perspective, from a caffeine perspective, and how can we fulfill that? One last question. I know there are always throughput issues and logistics issues when you do mobile ordering and order ahead. Are you satisfied with the time to market for mobile ordering, and does it ever get in the way of the people who just drop by?

So for us, mobile order, I think we had the benefit of learning from the rest of the market. And we also know so well that connection between our broista and our customer is what makes us special. So as we design the program, which we just launched nationwide in Q4 of last year, so this is our second quarter across the country with mobile order. We're at 11% of transactions. And I think our broistas are doing just a fantastic job.

fabulous job of keeping that connection and also allowing customers to have that drink ready for them when they arrive at Dutch Bros. Well, it must be the case because the same store sales are really terrific. And of course, Best Buy, your company owns stores, which we know are really crushing it. And I want more company owned stores. I want some stores in New York or at least Pennsylvania if you can't give us New York. Anyway, Christine Perrone, presidency of Dutch Bros. Thank you again for another great quarter. Thank you so much, Jim. Absolutely. May the money back to you.

Coming up, from Pitas to profits, Kramer's eyeing Cava's latest quarter, and seeing if this past casual name could be Taziki for your portfolio. Next...

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Over the past month or so, the vast majority of stocks have rebounded from their lows. Some truly great names are still way off their highs. Take Kava Group, the Mediterranean restaurant chain that I've been recommending for the past 18 months, because I think it's a tremendous regional to national growth story. Now, I started pushing Kava in November of 2023. At that point, the stock was in the low 30s and ended up being one of our biggest winners last year, rallying to a high of 172 and change for cooling off a bit in the end of the year. Now, that actually the pullback was probably healthy.

Stock had gotten pretty overheated. The highs it was selling for more than 300 times earnings. Since then, it's cooled off rapidly, dropping to $70 and it's low on April 7th, for a rebounding to 96 and change today. By the way, I doubled down on this one. It was trading at 77 mid-March. Why? Because it just seemed too cheap to me versus growth rate.

And throughout this roller coaster experience, Kava's kept putting up excellent numbers while growing its store base across the country, revamping its loyalty program. The story never derailed in the first place, even though the stock sold off hard. So it has been hard to see this one rebound more than 40 percent from its April lows through last night's close. But after the close, Kava reported this is difficult. Wall Street wasn't too thrilled.

even though I thought the quarter was very strong. Let me explain. The company posted 10.8% same-store sales growth. That is terrific. But analysts were looking for 11%. That was fueled by 7.5% traffic growth, which allowed COVID to put up a modest revenue beat. But the margins were so much stronger than expected that these guys were able to grow earnings before –

depreciation, interest, taxes, and amortization by 35% year-over-year. And Kava earned 22 cents per share when Wall Street was only looking for 14 cents. Holy cow.

With the strong first quarter results, Kaba also raised its full year forecast from net new restaurants openings by two units and took its adjusted EBITDA forecast up by $2 million. And the company reiterated its guidance calling for same restaurant sales growth of 6% to 8% and a restaurant level profit margin of 24.8% to 25.2%. Not bad.

In the first quarter, Kava opened 15 net new locations. Good. I don't want to open them too fast, including its first restaurant in Indiana, bringing the company's footprint to 26 states and the District of Columbia. They also expanded their presence in Florida by entering the greater Miami area. Think about how much room they have. They just got to Miami.

Looking forward, management said they're excited to continue expanding across the Midwest and mid-Atlantic, with entries into Detroit and Pittsburgh coming very soon. Longer term, Kava says it, and I'm going to quote, well on its way to its goal of at least 1,000 restaurants by 2032, end quote. That's up from 382 locations right now. Good flight path. On the menu, innovation front management spoke about Kava's new Spice World campaign for this upcoming summer, which includes the recently debuted Hot

Harissa pita chips and two new bowls. The company also spent a lot of time talking about a marketing campaign with a new character named Peter Chip, whose birthday was on National Pita Day, March 29th, when Kava gave away free pita chips for the Lawley program members. Frankly, I found it a bit silly, but then again, I'm clearly not the core audience they're trying to appeal to, although there was one right down the block today I saw was just completely packed.

Here's the important point. CEO Brett Schulman explained that, and I'm going to quote again, by aligning the promotion with a branded holiday in social storytelling, we saw increased reach, record high app traffic, and over 130% more rewards redeemed than originally anticipated. It's a launch we're excited to build on in the years ahead, end quote. So yeah, Peter Chip might sound stupid to you, but Kava's clearly finding success with its marketing and its loyalty program. I

I guess dad jokes are back in.

Speaking of the loyalty program, Kava has seen great progress since the big update last fall. When the conference call, Schulman noted sales through the loyalty program were up 340 basis points as a percentage of total revenue, with total membership now approaching 8 million members. Later this year, Kava plans to roll out the next phase of the program. It's going to be a new tiered structure designed to further tailor benefits to guest preferences and enhance long-term engagement. This all sounds great to me, and you certainly can't argue against the results so far.

Meanwhile, all of the coverage from sell-side analysts was universally positive, a couple of them even raising the price targets overnight. This wasn't a perfect quarter, but in my view, it was a real good one, certainly better than a lot of the other restaurants I follow. Yet after some choppy overnight trading, the stock only pulled back today, finishing the session down over 2%. Frankly, I'm actually not that worried about that decline. I think the small pullback today simply reflects the combination of the stock's big run going into the quarter and the fact that expectations for CAV are still pretty darn high

after its incredible outperformance last year. For example, the company raised its full-year adjusted EBITDA outlook by $2 million to a new range of $152 to $159 million, which is good, right?

Well, unfortunately, that only brought the guidance closer to consensus EBITDA forecast, which stood at 159.7 million as of last night's close. The new numbers, again, still a little light. They reiterated the same restaurant sales growth outlook of 68%. That also fell a bit below the consensus estimate, which sat at 8.4% heading into the quarter.

In other words, the consensus estimates for Kava were already above what the company itself is promising. Those aren't weak numbers, people. Kava will be going up against some tough comparisons in the future, though. I remain in the same place on this one. I view Kava as a long-term growth play or what's known as a compound or a Wall Street. We like those, which grows and grows steadily over a long period of time.

Even after the stock's big pullback from its highs, this isn't a value played by any stretch of the imagination. As Kava still sells for north of 150 times earnings. Nobody says it's cheap. These great growers don't come cheap. I just think it's a situation where the scale of the opportunity is much, much larger than Kava's current $11 billion market capitalization. That's another way to look at it.

the opportunity versus what it's valued at. So I am not worried about the negative reaction today. And if you don't yet own this stock, you might want to use this pullback on strong results as a chance to do some buying, buying,

I do have one caveat, though. Because Kava is a high multiple price earnings multiple name, its stock will do very poorly if we get another big what's known as risk off market environment. It's a term I don't like, but it means that investors want to shy away from risky stocks. Then that's what we saw, say, from February through mid-April. But the bottom line, even if the market rolls over and Kava pulls back again, then

And I once again view that as an opportunity to build a position, just like when I told you to buy the stock back at 77 in April. Despite the hand-wringing about the economy, I've not seen anything to make me believe that Kava can't still become the great next story. And I'm talking about, yes, when we talk about restaurants, maybe the next Chipotle. As long as the regional and national expansion is on track, and it is,

This one should have plenty more upside. Great opportunity here. Now we're going to go to Elaine in my old home state of Pennsylvania. Elaine. Hello, Kramer. How are you doing? I am doing well, Elaine. How about you? Very good. Very good. I'm coming from New Hope, PA. Well...

I got to tell you, you're 10 minutes from my place in Pennsylvania, and I like New Hope aplenty. My daughter's there right now. What's happening? Well, I want to know about what to do with Netflix. Well, you know what? When you have a stock like Netflix, you got to do two things. One is you got to take out your cost basis.

which allows you to be able to pay the house's money. And two is forget about it. Let it run. Once you take out your cost basis, what happens? You can't lose money. And that's the way you invest in this country. If the market does pull back anytime soon, I'd use an opportunity to pick up some shares of Kava. Okay, it's not cheap, but it's never going to be really cheap. I'd be

I view this one as the next great growth story in the restaurant industry, Mediterranean food. Chipotle at one point was like this. Let's keep focused on this one. Much more made money. Including my exclusive on the state of the macro and more with Republic Services top brass. Then what should we be taking away from the recent season of the stock market? I'm giving you some stocks to keep an eye on as tariffs continue to affect the tape. And already calls rapid fire in tonight's edition of The Lighting Round. So stay with Creeper.

What do we do with the cyclical, economically sensitive stocks now that the president has rolled back or paused the most radical elements of his tariff agenda, greatly reducing the prospect of a recession, thank heavens? Consider the case of Republic Services, one of the leading waste management companies in America, with a stock that's been an incredible long-term performer. I couldn't believe how well it's done over this, for a decade or even longer. It's up 23% year-to-date, too.

Waste management is a cyclical business. It's highly tied to construction, generates tons of garbage. But I like the portfolio. These guys have it in many different baskets. In late April, public services turned in a technically mixed quarter, but overall solid growth. A slight top line miss, but also a solid 5 cent bottom line beat off the dollar for a few basis. Management also reiterated the full year forecast. If you're still worried about the uncertainty created by the tariffs,

Well, the reason creep higher of interest rates, maybe it's time to, I don't know, be nervous here. But if you think the economy is fine, this is a great place to be. So how about we go right to the source? Let's go to John Van Der Ark, the president and CEO of public services, to hear how the business is actually doing. Mr. Van Der Ark, welcome back to Man Money.

Great to be with you. Thanks, Jeff. You know, John, I want people to understand that Republic Services has one of the most, if you want an industrial company, predictable free cash flows. I was surprised at how great it is. Totally diversified around the nation. But really, the most amazing thing is 80 percent of your business is an annuity type. So you may look like you've got a lot of cyclicality, but in reality, things are pretty darn smooth.

Yeah, we like to say we're not recession proof, but we're recession resilient. So very recurring revenue base, very predictable, you know, stable cost structure, pretty good outlook on pricing. And so that's, you know, a formula that investors like. Now, I know, for instance, I have a I have a place in Pennsylvania and I just got what I guess what they basically they dropped. One guy dropped me. I was in. Another guy picked me up. I found

I found it was highly unusual. I didn't know about it. It looks like that you guys, you retain your business for a very, very long time. And that's also part of the secret sauce of Republic.

Yeah, it's a slow growth business on the other side. So that makes it a loyalty business. So we have about a 94% retention rate with our customers. And so we focus on doing a great job and giving them no reason to switch. We want to pick them up every time, make it easy to pay your bill, exchange your container. And if we do a great job, customers stay with us for a decade or longer.

How are you handling the sustainability? Because I think you've got a very, I know it's only not as much yet as I want, but it's going to be. But you've got this polymer centers idea that to me makes a lot of sense in terms of trying to recycle things.

Yeah, we're challenging every ton that goes into a landfill or even any ton that goes into a recycling center today. Could we do something more or better with it? So today, most rigid plastics go into something like pipes, park benches or carpets. And the idea of the polymer center is to be able to take that product one step further along the value chain and turn that water bottle back into food grade recycled PET. And so we've got cases on the West Coast where you could buy a water bottle in the West Coast and

And in 120 days, it could come through our system and be back as flake in a new water bottle on your grocery store shelf. Now, is that something you've decided to do because you're good citizens or is there also good business for shareholders?

Both. We always say if you're going to be environmentally sustainable, you've got to be economically sustainable. So the world needs circular solutions, but those have to be profitable if they're going to be long term and you're going to reinvest in those. So we're putting about 320 million of capital across four polymer centers across the U.S. And that's going to have kind of a double digit cash on cash return. So it's going to be great for our investors as well. OK, I was listening yesterday to Walmart's call.

And what they talk about is that there are a lot of hidden things that you never thought would be a problem. You know, there'll be parts and some delivery stuff that it turns out that things are more variable because of tariffs. Are you discovering, I would say, hidden costs that are now an issue? And can you contain them?

Yeah, we're not, again, immune from tariffs, but it's got a pretty diminished impact. So some of the trucks we buy, for example, might be subject to that. Some of the spare parts we buy to fix those trucks over time. But we're asking our suppliers to be very transparent on marking up what is a tariff or spelling out what is a tariff.

charge so that when the tariffs come down or tariffs change, that we're not stuck with a higher pricing. And I think that's going to be important if we don't want inflation to creep into the system. OK, and the last thing you need to know is you're still finding outfits to buy. I had felt in the 80s and 90s when it was waste management and Browning first that there were no individual franchises that were left to buy. I guess that's not the case.

Yeah, we do. It's a hidden secret. We do about 20 acquisitions a year. There's still a pretty big tail in the industry. And those are great acquisitions for us to do because we can layer those right into the density of our collection operations. We can put those into our IT systems. We could take those people over. And 60 days later, you don't even know we bought the company. And we get great, you know, kind of a great post-synergy multiple from those acquisitions. And you've got customers that are in construction. You've got some of them that are in also construction.

waste that's tough to handle. What is their overall look when you speak to them about where are they in terms of thinking that the economy is? Are they pessimistic or optimistic? Because the level of pessimism we got today in some consumer data was so off the charts that I'd hate to think that that's representative of the nation.

Yeah, direct construction is about 7% to 8% of our revenue. And that's certainly been challenged, both single-family home and commercial construction. And until I think the tenure comes down, I think we're not going to see a boom there. Although long term, I'm very optimistic because we need more single-family homes in the United States. I'd say manufacturing has been more of a mixed picture where the industrials, automotive, that's been softer really for the last 36 months. But high-tech biopharma has been stronger.

I think more broadly, there's a lot of uncertainty and there's pockets of weakness, but people conflate the two. I think there's more uncertainty than weakness. And I think if we got stability in policy, I think there could be a lot of upside in this economy. Boy, that's very helpful for me, too, and for many of our viewers, because we just need we need it. But I've been saying a more constructive view. That was a constructive way to look at the country right now. John Van Der Ark is president of the

Republic Services, RSG. What a winner. You've given us some amazing long-term growth, sir. Thank you so much. Great to be with you, Jim. May I have money back in for a break? Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time. It's time for the lightning round. That's right. Take a breath for a moment. You're saving the time. Bye-bye. Bye-bye. We play into the sound.

And then the lightning round is over. Are you ready to keep that coming? Lightning round comes up with Gabe in Michigan. Gabe. Booyah, Jim. How's it going? It is going well, Gabe. How about you? Good. Thanks for taking my question. So the stock has had very nice strength fundamentally and technically, even through the correction.

What do you think of UTI? I think you go way higher. OK, this is what we need in the country is trade school. And I think that it jives very well with where we are in the economy. So I'm going to tell you, I think you continue to go higher because it fits the thesis of what we expect in an era of A.I. and the need to be on your game in non-A.I. jobs. Let's go to Travis in Minnesota. Travis.

Hey, Jimmy Till. Thanks for taking my call. My pleasure. What's up? I'm looking at the Buy Now, Pay Later space, specifically company Sezzle, ticker S-E-Z-L. I think Sezzle's in a crowded space. I know it hit an all-time high. I would actually ring the register on some Sezzle because even though it's not Sizzle, I do think, and I'm looking right now at my chief scientist and research director, Ben Studdle. We both feel that it's gotten a little too hot. I think that's fair. How about we go to Gabriel in Colorado? Gabriel.

Hey, Jim. Big fan. Hope you're doing well. Oh, thank you. You know what? This rocket labs initially, I have to tell you, because I don't like companies that lose a lot of money. I was skeptical, but so many companies need to put up rockets. I think it's actually a decent story. And that's the aspect that I've not recommended until just now. Let's go to Lewis in California. Lewis. Yes, Jim. How are you doing today? I'm doing well. How about you?

Terrific. Thank you. I was calling in about Archer Aviation. Oh, that one's a bridge too far for me to tell you the truth. Electric vertical takeoff. I mean, I'm willing to go with Rocket Lab, but Archer is just a little bit too far. I mean, someone who's like 18, 19, 20, 21, you might want to believe in it. I don't want to have too many of these kinds of stocks on my so-called recommended list. Let's go to Rich in Virginia. Rich.

Jim, thanks for taking my call and for everything you and your team do for us investors. Thank you very much.

Hey, wanted to get your thoughts on ticker symbol CSGP CoStar Group. Okay, normally this, and I know these guys, normally it would be good to have the analytics involving commercial real estate, but right now commercial real estate is not doing well in this country, and we know that. So that's their core, fundamental business, and yet the stock sells at a very high price to any affordable. It does make money, though, but it's not for me. Let's go to George in Arizona. George.

A big old Friday boogie-woogie booyah to you, Jimmy Choo. A speculative Friday booyah to you, my friend. What's up? We're looking at something in energy today for a change.

I've got this stock that's jumped nicely, up 24%. The earnings per share and guidance look juicy, and the dividends hard to ignore. Symbol VNOM, Viper Energy. I know, mineral royalty. Reminds me of Texas Pacific Land Trust. It's not my cup of tea, but I've got to tell you, if you want to get some yield, I see it. But it is down 15%, which, by the way, would take away whatever 5% yield would give you. Keep that in mind.

How about Ryan in Ohio? Ryan. Hey, Jimbo. It's Ryan and Kat here. Okay, what's going on? Hey, we're looking yesterday at the Pfizer, FI. I got their teeth kicked in. I got to tell you, this is one where I said I've got to take my time and figure out what the heck is going wrong with Pfizer. This was just a disaster, and I've got to know more because I don't like what I'm hearing. Let's go to Eli in California. Eli.

This is Ela from California. Thank you for taking my call. I'm a first-time follower. All right. Yes. Thank you for spreading all the knowledge. But anyway, my question is regarding Arista Networks.

The Lightning Round is sponsored by Charles Schwab.

Coming up, with a recession seemingly off the table, Kramer's evaluating what changes in the hedge fund playbook drove this week's rally. Next.

We often speak of moments when the stock market tends to do well. We know there's seasonal periods and patterns that are terrific. We know that stocks thrive, for instance, when interest rates are going down. But there's another auspicious moment, and that's when the conventional wisdom collectively decides that because of extenuating circumstances, in this case, the welcome break from ever-higher tariffs, we're no longer at risk of a recession in the near future. For as long as I've been in the business, that's a terrific time to buy, and I think that's where we are right now.

When we look back at this week, a very bullish one, we're going to remember it as a time when Wall Street analysts, particularly the strategists, took the recession concerns off the table. And that's why we had such a terrific run, including this fabulous industrial-led rally that we got this week. Why did this happen? Not that long ago, when we were all terrified about how bad Liberation Day tariffs would be for retail, a buddy consensus emerged that our consumer-led economy simply couldn't hold up under the weight of these tariffs. And a recession? Well,

it was inevitable. Then we got the three-month stay of execution of global tariffs, which mattered, but we still had to use China tariffs, almost like an embargo, which could have done real damage. Certainly there would have been shortages. But fortunately on Saturday night, there was a break in the talks with China. And while there are still some tariffs, they're not going to be big enough to wipe out the economy.

So the companies that were levered to economic growth, think about companies like Caterpillar, United Rentals, Deere, saw their stocks buoyed by the removal of the recession worry. You saw some of that at work yesterday when Deere reported a solid quarter but was cautious about the future, something that would have at one time set the stock down a few weeks ago, but this time actually spurred a rally in the company's stock.

You also saw it when Walmart reported a terrific quarter yesterday, and the stock went up at first before plummeting when management mentioned the need to stay concerned about tariffs. The stock then rallied back, though, and continued to move higher today, something that would never have happened if people were still worried about a near-term recession.

It's so prevalent in the market's dialogue right now that UBS came out with a terrific term for it, the contained downside scenario. They think that, quote, lingering uncertainty will be somewhat of a drag on demand, end quote, but that we're going to get through this.

Why is this switch so big? Because when money managers believe there's a high chance we're headed for recession, they not only sell a lot of stocks, they also short bet against anything with economic sensitivity, like the industrials. When the chief catalyst for these short positions, the imminent recession suddenly dissipates, these short-selling hedge funds have to buy back stocks to close out their positions because there's no longer a thesis for them. The stocks they tend to short are things like Caterpillar, United Rentals, Cummins.

the paper stocks, building products, chemicals, truckers. When the hedge funds come in to cover them, because it's a concentrated group of stocks they bet against, well, they give you what we sold this week.

Now, we haven't yet seen the actual hits to the consumers from the tariffs, and that is going to come now. Walmart made that abundantly clear. We also don't know how much the consumer will only be hurt. That depends on how much of the tariffs get eaten by suppliers or retailers and how much will get passed on. That's one of the reasons why people feel this is the end of the rally. Still, though, if hedge funds thought we were about to experience the apocalypse, and many of them did,

Then they were poorly positioned coming into this week. And when hedge funds are poorly positioned, you get incredibly motivated buyers like the ones we saw all week that helped take us all the way almost back to even. And they may not be done with all their buying, at least because we're suddenly in a very different world with the pessimists having been caught with their pants down until they turn optimistic, which might take a little bit.

We should remain in good shape. I like to say there's always a bull market somewhere, and I promise you I'll find it just for you right here on MadMoney. I'm Jim Cramer, and I'll see you Monday. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet, or another medium.

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