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Learn more at Schwab.com slash trading. Substance use disorder and addiction is so isolating. And so as a black woman in recovery, hope must be loud.
It grows louder when you ask for help and you're vulnerable. It is the thread that lets you know that no matter what happens, you will be okay. When we learn the power of hope, recovery is possible. Find out how at startwithhope.com. Brought to you by the National Council for Mental Well-Being, Shatterproof, and the Ad Council. ♪♪
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I'm here with my friends. I'm just here to try to make you a little money. My job is not just to entertain, but to educate, teach you a little. So call me 1-800-743-CBC. It's all coming together for the most speculative stocks in the market. And it's a dream come true for many a dreamer.
While the average has drifted lower, Dow dipping one point, S&P declining 0.27%, NASDAQ losing 0.5%. We should have been stronger in the banks and techs today. The real action is in the stocks of companies that make no money whatsoever, and many have close to no revenues. It doesn't matter here because they're the right stocks at the right moment.
For this market, you know what I got to do? I got to borrow a title from one of the late Joan Didion. I thought she was such a great writer. And it's the year of magical thinking here. The year of magical thinking. And boy, is that year ever paying off.
Today was an exceptional day for the three groups that have been leading this year of magical thinking. Space, quantum and nuclear. These are three of the most exciting areas of this market. I want to say from the outset that I think we're more at the middle than at the end of the magical thinking year because too many things are going their way. Do I care? Do I want it? I just want you to make money. That's what I want. Now, something that shows you how incredible this moment is, why it keeps drawing people in, because there's so much money being made. Assuming you remember to do what?
to ring the register on some. Remember, the money is not made until it's taken off the table. Guess where this one started? It started in a place in Paris, Paris, France, where NVIDIA CEO Jensen Wong told us that quantum computing is reaching an inflection point. Sounds like an innocuous line, doesn't it? A statement that we're in reach of being able to apply quantum computing to solve some interesting problems in the coming years? Sounds banal.
Except only a few months ago, Jensen was talking about quantum computing like it was 20 years away from being meaningful at all for anything, any, any important. Then he pulled that some in. I saw him go to take it to, like, say, 10 years. Today, we learn the quantum future is now.
An inflection point means that you're nuts not to buy the quantum stocks. So what people really did, it looks like they sold NVIDIA and bought the quantum stocks. They cast the characters people always buy. Oh, it's Rigetti computing and IonQ, D-Wave quantum, quantum computing. I've had a hard time dealing with these stocks, frankly, because they are all losing gobs, gobs, gobs, gobs of money. They have almost no revenue. As long as their stocks were low, it was hard to see what they could do. But you see, now that their stocks are high,
They can issue new shares, raise all the money they need to stay alive. The stocks are that hot.
And of course, quantum computing is just opaque enough that it's very easy to pitch for speculation. Even as it's incredibly hard to figure out which companies are the best operators, I tend to default to the balance sheet, the income statement. I'm old-fashioned, but when you do that, these stocks, well, you blanch. Perhaps every one of these quantum computing players will fit into Jensen's inflection point. Maybe with their stocks so inflated, they can buy some fellow quantum companies with better prospects. But at this exciting moment in the year of magical stock thinking, the
These stocks are very much in style. So people sell all sorts of traditional stocks like Nvidia to raise money to get some quantum exposure, all because Jensen Wang has dramatically moved up his time frame.
What else fits the moment? We've become transfixed by nuclear power. We know that the data centers that seem to be going up everywhere are humongous users of electricity. We know that the hyperscalers who run the data centers would prefer to use nuclear power because it's clean. We know that we've been decommissioning nukes for decades because we thought they were unsafe. But one company...
Okla never gave up hope that the nuclear industry could turn things around. It has toiled for 12 years to get its form of nuclear power endorsed by our government. These guys are serious professionals. One of its board members was current Secretary of Energy Chris Wright, a textbook oil man, CEO of the second largest fracking company, Liberty Energy.
Now, Oakloe has no earnings and it's losing scads of money. But no matter. After the close tonight, the company offered $40 million worth of stock to give them plenty of breathing room. It's the kind of smart offering that keeps the ball rolling. Others here should be thinking of the same thing when they have good news like Oakloe.
The income statements simply don't matter in the year of magical thinking because we just learned that Oklo was selected as the intended award winner to power a Yulson Air Force base in Alaska with a nuclear power plant. When it rains, it pours. The NRC, the Nuclear Regulatory Commission, has started reviewing a report that says Oklo could streamline the whole process, which we know is cumbersome and must be due for reform.
Maybe these guys can make it easier to build nukes. I don't know. Oklo has the whole group jumping, which is exactly what you'd expect in this year of magical thinking.
But wait, there's more. In a market that's engulfed in the kind of extreme speculation we have not seen in years, arguably since the 90s, few sectors have gripped us more than space and defense. So along comes Voyager Technologies, which launched itself in the public market today with a dazzling IPO. Nine days ago, this company said it would sell 11 million shares at a price between 26 and 29. They ended up issuing 12.35 million shares at 31, and then the stock opened at 69 dollars.
and 75 cents. And why not? Listen to the first line of this part of the prospectus that described the company. I'm going to quote here. Quote, we are an innovation-driven defense technology and space solutions company. Our company was purpose-built to reflect this goal. Then the document goes on and says, quote, we strive to solve complex challenges to fortify national security, protect critical assets, and unlock new frontiers for human progress and economic development. End quote.
That's not all. Voyager is, quote, developing artificial intelligence-enabled edge computing in space, bringing intelligence processing directly to satellites to enhance security and accelerate decision-making.
Also, not only is this company purpose-built to reflect those goals, I think it's purpose-built for the year of magical thinking and a speculative bubble it's building. Because while it has revenues, it's been losing, again, gobs of money. But now that it's come public, you could argue that Voyager can raise all the money at once. I try to be skeptical of these three red-hot areas, but as I told you last week, once the thing really takes off, you can't be a scold.
I'm not about you not making money. I'm about you making money. And the market's saying, listen, these companies can raise some money. And I think we're going to see scores more coming public. By the way, we own Goldman Sachs for the child. So there's another way to play it. The investment banks are eager to give it to them. And they know that there's a thirst. They can't be slaked without more deals.
Here's the bottom line. We're about to have an IPO boom that rivals 2021 and perhaps even exceeds it. Because unlike back then when we had SPACs but no ideas, this time we have real ideas with real opportunities to raise money in order to hold on through the industry's inflection points.
and take part like all of us in the year of magical stock thinking. As long as people are willing to pay up for the companies with no earnings and little revenue, these deals will keep coming and coming and coming, and the stocks will keep taking more money away from the mainstream companies like NVIDIA that really make up the averages. Hey, I want to go to Gary in Alabama. Gary!
Hey, Jim, first a comment. The blind lady that called you last week, that was a wonderful story. See what you do for people? You and Jensen Wong helped that lady pay off her house, and I was almost moved to tears. I'll tell you, Gary, I have to tell you. I told my wife that. I went home. My wife doesn't watch the show, but that's okay. And I just felt like I said, listen, maybe this is, you know, because she's always saying, how are you going to do this show? How are you going to do this show? It's like, good, hey.
Hey, good morning. How are you going to do the show? Oh, good evening. How long are you going to do the show? And after I told her that, she goes, I can see why you want to do it. I can see. It was that powerful. So thank you. It was that powerful. I hope you never retire. You've done the same thing for me as well. You and Jensen have changed my life literally.
well james is alive people's lives but thank you well that's that's a fact well i i bought this doctor a few months ago when i thought i had bottomed but it just doesn't seem to be able to find any traction what's your opinion of truest bank
You know, I am really surprised that Truist is doing badly as it is. I think it's a pretty good situation. I would hang on to this one. The fact that it yields 5%, I think that that's 10 times earnings. I think you can go to 12 times earnings. I want to thank you for your comments, and I think you should hold on to Truist, if not even buy some. I need to go to Tyrone this year of magical thinking. Tyrone!
Hey, Jim. How you doing? Hope your day's going well. Tyrone, it's been an excellent day. I've been outside seeing a lot of people doing things. It was really a pleasure. How about you? It was a good one? Oh, it was great. Beautiful out here in the Virginia area. Oh, fantastic.
I was calling in because I was intrigued about Coca-Cola Consolidated Ticket Symbol Coke. They just did a reverse stock split, and they seem like they're reasonable to pay for for regular-day investors. So I just wanted your opinion on that. You know, Tyrone, it doesn't have the yield that people want. I think it's a really good company. It is very intriguing to me.
because the distribution is a really good business. I would hold on to it just because I think the distribution is business, not because it's necessarily good right now, but I do know that long-term it's been a good one, and thank you for the call. Hey, how about we go to Craig in Missouri? Craig! Booyah, Jim! How are you doing today? I am doing well, Craig. How about you?
I'm doing great. Just finished getting my tag renewed at the DMV, and so I'm asking you about a grocery store right now. All right. It is a place that I use all the time. They always seem to be full of people. It's good service. I'm entering a position at Kroger Stock. I wanted to know what you were doing. All right, I'll tell you. Kroger Stock is rolling over, Craig. That's the problem. It's just rolling over.
And when I see a stock rolling over at 13 times earnings, I say to myself, OK, let it come down. Buy a little. Buy a little. And then wait for the next level. Do not buy all at once. It could be a bad sign that this stock is having such a hard time at
this particular moment, and it sure is. 73 down to 64. Have a wait till it goes to 60. Then we see whether the chart's a little better right there. All right, listen, look, based on what we've seen so far, I think we're looking at an IPO market that's like 2021 or maybe even better.
Better than 2021 because these companies are actually driven by real ideas, even if they're losing a ton of money. Oh, man, money tonight. President Trump wants to bring back manufacturing to the United States. I spotted an industrial stock that I think would be a big beneficiary of this move. I'm going to reveal it. Then there's a reason why they're called rare earth minerals. They're hard to come by.
I'm sharing what I think our country needs to do to source these critical elements. And Cardinal L is hosting an investor day tomorrow. We're getting a preview of what to expect with the CEO. And it's a very winning company. So stay with Kramer.
Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Cramer. 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.
Don't just ride the index, seek to outperform it with FELC, the Fidelity Enhanced Large Cap Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding. And
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Before investing in any exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully. While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs. Fidelity Brokerage Services, LLC. Member NYSC SIPC.
- You get the store clerk's attention and point to your favorite lottery scratcher. - Three. - You prepare your lucky quarter. - Two. - And work that popcorn shell out of your tooth. - One. - Quarter beats scratcher and-- - Scratch away. - With the Illinois Lottery. Be smart, play smart. Must be 18 years or older to play. - Substance use disorder and addiction is so isolating. And so as a black woman in recovery, hope must be loud.
It grows louder when you ask for help and you're vulnerable. It is the thread that lets you know that no matter what happens, you will be okay. When we learn the power of hope, recovery is possible. Find out how at startwithhope.com. Brought to you by the National Council for Mental Well-Being, Shatterproof, and the Ad Council. ♪
Now that we're nearly half a year into Trump's second term, we can say one thing is definitely certain. The administration wants to bring manufacturing back to America, no matter the cost. If it sometimes makes very little sense from a business perspective, like what they're doing to Apple and the iPhone. See Apple stock today? Wow.
But regardless, this push for domestic manufacturing is happening. Unfortunately, it's much more expensive to make things here in America because wages are so much higher than in developing countries that normally do this stuff. So if you want to manufacture, you know what you do? You got to embrace automation, which brings me to Rockwell Automation, the leading industrial automation digital transformation company. Now, these guys make equipment and software that allows factories to run with fewer workers. That's exactly what we're going to need if we're going to have domestic manufacturing make a comeback.
There's a reason rock automation stock has run up 51% from its April lows. So does it deserve to keep running? Does that big picture thesis give you enough reason to buy the stock here? Look, we've heard this story before. 2021, we were starting to see the first signs of what became the supply chain crisis. Even though President Biden, no obvious lust for tariffs, was in charge at the time, there was an idea that supply chain disruptions would lead to a wave of reshoring
from companies that were looking to avoid repeating that. They want to avoid the COVID experience. But that thesis quickly fell apart by early 2022 when Rockwell Automation disclosed that they were experiencing their own supply chain problems, especially with semiconductors, which prevented them from doing a great deal of business. The stock spent the rest of the year getting eviscerated.
By early 2023, it had rebounded. Rockwell found a new way to this point. After reporting a bad quarter a little less than two years ago, the stock got stuck in the high 200s, and that's where it stayed until the whole market rolled over earlier this year. So is this the latest rally in Rockwell to motion, finally the real deal? This is hard.
OK, first, you know, you need to know that last year was not a particularly good year for this company. It's a 10 percent organic revenue decline, decline earnings down 20 percent. Some of the worst numbers came from Rockwell's fiscal fourth quarter, which ended last September as business deteriorated over the course of the year. Now, I spoke to CEO Blake Moret in November of last year, a few days after Rockwell reported those numbers. I was surprised by his optimism, seemed off base.
But he explained that the company was up against some very tough post-supply crisis comparisons last year.
He also stressed that they've been moving aggressively to lower their cost basis, which should set the stage for stronger earnings growth down the road. And hey, in the seven months since the interview, Rockwell Automation has been able to deliver just that. It's pretty strong numbers. February, the company reported inline sales and a big earnings beat. Then in early May, they posted a really strong set of results, including a legitimate revenue beat, another big earnings beat.
Crucially, when the company reported that last quarter, about a month ago, Rockwell maintained its full-year sales outlook and it raised its full-year earnings forecast really significantly. Originally, management was guiding for 860 to 890 in adjusted earnings per share. Now they're saying it's going to be more like 920 or 1020 worth of earnings. That is much, much better than Wall Street was looking for. I'm not used to seeing those kinds of blowouts. So putting it all together, things are playing out fine.
pretty much like Blake Barrett said they would when he came on the show last November. Sales have improved, and it sounds like he was right about Rockwell being able to lower its cost base, which has translated some tremendous earnings numbers. We went and looked back.
This was the first time that Rockwell has raised its full year earnings forecast since late summer of 2023, which not coincidentally was the last time the stock traded as high as it currently is. Now, during this latest quarter in May, the company spent a good amount of time talking about the tariffs, what they mean for business. It certainly sounds like Rockwell Automation will benefit from
fit in some major ways from the new tariff regime. As Moret explained on The Conference Call, quote, there is still a generally optimistic long-term view among most of our customers, especially those with high exposure to the U.S., because the idea of U.S. manufacturing as a good thing for the U.S. economy resonates with a lot of us. And of course, Rockwell is a net beneficiary of that. End quote.
But for whatever it's worth, you should know that the tariffs aren't all good for Rockwell Automation. For example, the company said that some of its customers, the automotive industry, are delaying plant facilities as they wait and see what the end state tariffs are going to look like. Makes sense. Rockwell also has to pay tariffs itself on some components. The management said they're using what learned during the supply chain crisis to try to limit the damage.
Still, generally speaking, if we see a huge wave of reshoring thanks to this one, wow, it's going to be a winner. Now, after that last quarter in early May, the stock caught an upgrade from influential J.P. Morgan and industrials analyst Steve Tusa, who had hit the stock for an underweight and he took it to neutral, meaning sell to hold. Now, Tusa was really the only analyst on Wall Street to have a
a real negative look on these guys. But he was also the only one to have a sell on GE back before its major problems several years ago. So this guy's got clout.
And he's been a longtime skeptic of Rockwell Automation ever since that underweight from December of 2019. So while an upgrade is to hold, it's far from enthusiastic recommendation. You got to look at the context. The fact that Tusa is no longer a hater is a big deal. Another analyst from TV Cal and also updated the stock from sell to hold after that last quarter. Slowly, Rockwell Automation is building back.
what I regard as being some admiration on Wall Street. About two weeks ago, in fact, it caught another upgrade, this time a hike from equal weight to overweight from Barclays analyst Julian Mitchell. Here's how Mitchell explained it. Quote, we think the top line will show an improvement alongside a rebound in factory automation markets, especially programmable logic controllers. The operating margins are
also likely to recouple closer to typical multi-industry expansion rates after a hiatus over the past five to 10 years amidst a greater focus on operational execution, end quote. At the end of the day, while I still have some scar tissue from this one after its multiple failures over the past years, I see enough good things happening here to justify going forward. I think it's a good one.
Here's the bottom line. Big picture, Rockwell Automation, it's a winner from tariffs. They forced companies to move their manufacturing back to the United States. As a matter of fact, it's the way to play reshoring. Because without losing a fortune, these companies have to rely on Rockwell Automation. But I would not stick my neck out for the thesis if the fundamentals weren't already on the mend. Fortunately, Rockwell's going in the right direction. And this trade war, I'm calling it simply the icing on the cake. May money's back after the break.
Coming up, Kramer's revealing his main takeaway from the U.S. trade agreement with China and what it could mean for trade talks with other countries next. Don't just ride the index. Seek to outperform it with FELC, the Fidelity Enhanced Large Cap Core ETF. Unlike passive ETFs, FELC is run by a team of experts to adapt to market conditions and pursue upside potential wherever it's hiding. And
And while you get the potential outperformance of an actively managed fund, you can still buy and sell it on your terms, just like any other ETF. Discover FELC, the Fidelity Enhanced Large Cap Core ETF, part of Fidelity's suite of active ETFs. Learn more at fidelity.com slash FELC.
Before investing in any exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully. While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs. Fidelity Brokerage Services, LLC. Member NYSC SIPC.
Substance use disorder and addiction is so isolating. And so, as a Black woman in recovery, hope must be loud.
It grows louder when you ask for help and you're vulnerable. It is the thread that lets you know that no matter what happens, you will be okay. When we learn the power of hope, recovery is possible. Find out how at startwithhope.com. Brought to you by the National Council for Mental Well-Being, Shatterproof, and the Ad Council.
If we've learned one thing during the president's recent negotiations with China, it's that we don't have the cards. We can disrupt their entire manufacturing economy. We can threaten them with a level of unemployment, specifically youth unemployment, that they didn't see coming.
But in the end, we got a role because of one thing, our well-known dependence on China for rare earth minerals. They got them. We need them. Although it does make you wonder, what the heck were we thinking when we started a trade war without having this rare earths issue all buttoned up and ready to go? Didn't we know that they'd ask for the moon and get it because we need these materials to make smartphones, tablets, speakers, touchscreens, wind turbines, semiconductors, lasers, electric vehicles, as well as the F-35 fighter jets?
fighter jet which is loaded with rare earth materials did the generals know that
I know the companies that make this stuff did. Someone screwed up, as the country these planes would most likely be used to defend would be Taiwan. And the challenge would come from China. How stupid can we be if we need Chinese materials to make our military hardware? Only a few minutes after we announced that we had reached a framework, whatever that is, the Chinese came out and say the new licenses for rare minerals will last only six months. Totally insulting, but typical Chinese.
So what are we going to do? The only big thing the Chinese wanted was NVIDIA chips. We knew that from the get-go, and they were non-negotiable. Even as I think giving those chips to China would have stunted their growth while giving them as much control over their economy as they have over ours. So what should we be doing? Right now, the White House is basically sticking it to everyone else in the world so we can punish countries that have taken advantage of our free trade at all costs policy that's been going on for decades. I get that. But it's time to make real deals, the kind the Chinese have excelled at.
Right now, Brazil has 21 million metric tons of these crucial rare earth minerals, one fifth of the world's known reserves, 10 times what we have. It's starting to produce all the metals we need for magnets. We need to immediately make a deal with Brazil in return for waiving the 10 percent reciprocal tariff and begin to funnel money into the country. This needs to be done yesterday, Manhattan Project style. It's not like China has monopoly on rare earth minerals in the ground.
The raw materials are everywhere. It just costs a fortune to refine them, and nobody else bothered to spend the money. Now we go to Vietnam, where they're staring down the gun barrel of a 46% tariff, including on all goods that our companies make there. Vietnam also has reportedly a large amount of rare earths and reserves. And more important, it has an integrated supply chain. We need to negotiate with them right now. We take the tariff to zero if they let us have co-development rights. Smart. Well,
Well, Australia's an old friend. It's got 5.2 million metric tons of reserves. They're supposed to be of the highest quality. Time to roll up our sleeves, cut down our tariff, and make sure that we do a Manhattan Project there, too, to get the minerals in our hands refined and ready to go. Plus, we should support the new Mexican project that's all about rare earths right here in our continent.
Something that's close by. And we can really start a great long-term relationship with a country that's no longer seen as a conduit to those who want to cross the border illegally. I know America first. But you know, there's somebody got to be second. Might as well be our friends. Here's the bottom line. We need to make these rare earth deals with the same alacrity the White House gave out the reciprocal tariffs on Liberation Day. We need them yesterday. Then and only then will we be truly liberated. Stafford in California. Stafford.
Hey, Jim, how are you? I am doing well. How about you, partner? I'm okay, thanks. I want to get your thoughts on Sherman Williams.
Thanks. On Sherwin-Williams. OK, Dow stock now, by the way. I think Sherwin-Williams. Look, I like the stock of Home Depot. Home Depot, which is, by the way, less and less expensive. It's got $7 today. I think some people are selling it because ice is lining up in front of Home Depot's. And I think the stock's getting hit because of that. I need to go to Alex in Oregon. Alex. Booyah, Jim. How's it going? All right, Alex. How about you?
I'm good. Thank you. So I'm calling in today about asking for a company. It's called LMB. I've followed them for a bit now. They're kind of like an owner-operator HVAC company. They're very small. They've got a pretty small float, decent insider ownership, but they're pretty expensive in the fundamental aspect of it. I'm just wondering, does this look like something I should buy on dips at all?
This one is so high. It's got such a high price to earnings multiple. I cannot recommend it. I don't care how. It's like Ferguson, I guess. And people just say, you know what? I'm just going to be in there. I don't care. And I don't know why. I don't want you to be in there. It's too high versus, say, a Home Depot, which is just really inexpensive. Look, we need to take a more methodical approach to tariffs. I am being
very serious about what I'm saying here as offering a plan to the administration because it's time to look past China and make some rare earth deals with the rest of the world that makes it so they don't own us. I know they don't own us. I'm telling the truth.
Much more mad money, including my exclusive with Cardinal Health, CAH. We recently had a segment on the big three drug distributors, and I told you this one was my favorite. I'm sitting down with the CEO to see if this trend can continue ahead of an analyst meeting. And you called in, you stumped me on a new defense tech stock, but of course it's really an old company, you just changed their name. It's called Momentum. And I think it's got some momentum. It's kind of a project momentum. And your call is rapid fire. Tonight's edition of The Lightning Round. So stay with Kramer.
Tomorrow, Cardinal Health, one of the nation's top drug distributors, is hosting an Investor Day event I think will be a really big deal. This whole industry is in a real quandary, but it, well, it's been there before. Whenever a major politician like the current president starts talking about knocking out the drug middlemen to bring down health care across Wall Street gets spooked. Yet these stocks, including Cardinal Health, long my favorite name in the space, never seem to stop chugging higher. This one's up nearly 30 percent year to date. In fact, since its last investor day two years ago.
Cardinals up almost 80 percent, roughly double the return you would have gotten from the S.P. 500. So let's take a close look with the event with right on the eve of the event with Jason Holler. He's the CEO of Cardinal Health. Hey, Mr. Holler, welcome back to Mad Money.
Hey, Jim, great to be here. All right, so how did you do it? I mean, it's very rare that I see that kind of outperformance from a company that isn't just like a brand new firecracker company that we've had to deal with lately. What was the secret sauce here? Yeah, thanks, Jim, and it's great to be here again. So the main point is we have really put everything into three key buckets. First of all, the industry has been quite resilient. The underlying utilization in the pharmaceutical space has been very predictable and resilient, and in fact, a little bit stronger than it's been historically.
Specifically to what we've been doing, I'd put it all into two key buckets. Our core has been very strong, whether that's core distribution or the similar services around that. We've invested heavily there to make sure our customers get a fantastic service level and experience. And then we are also investing organically and inorganically in M&A, where the market is growing the fastest, which is specialty. We put a lot of money to work recently, and we're seeing the benefits driving our overall business. Okay, so talk to me about specialty, because people at home may not realize how that's different from M&A.
I don't want to call it commodity because it's more than commodity. You're just your regular business. But specialty to me could mean generics, could be biosimilars. It could be at home. What are some of the special things? Yeah, simply put, specialty means that there's specialized requirements and handling. I mean, the name really does define what it is. But the key part of it is it's in with a lot of the therapeutic areas that are growing more quickly. And so this is driving underlying volume. The specialty market is growing around 10%.
per year. The other part, traditional part of the market is growing around 6%, so still good. So they're both key tenants to our growth plan, but it really takes both to continue driving the business long-term. Okay, for the longest time that I can recall, before you got in, I always felt that there were three companies, you know, there's Sincora, McKesson, you guys, and it's just a horse race. Sometimes one's ahead, sometimes one's not. But you have broken away in a different way. Can you tell me how your company is distinguishable from the others in the group?
Well, I'm going to focus on what we do each and every day and where we believe we do excel. I think we take care of our customers better than anyone. We really do believe we're healthcare's most trusted partner. And I think our customers would say the same thing. And that's because we show up each and every day. We put their needs at least neck and neck with our own. We find win-win solutions for each other.
And the market has been growing well in the areas we've invested. We have positioned our business to take advantage of some of those more favorable secular growth trends. One thing that you'll see a lot more tomorrow in our investor day is our other growth businesses, our nuclear at-home solutions and opti-free business. These are each businesses our competition does not have, and that's unique to us. So we have been investing more significantly there, organically and inorganically, and that has been a nice tailwind for us. Okay, so those of us who've been south, and particularly in Florida, where we love a particular market,
Grocery store,
You won that business. Now, they're a very discerning company. Everybody I know goes there, loves there, loves it. Tell me how you won that business. Well, I love winning accounts and customers and relationships like that because they are going to be a tough customer and going to make us even better. But it really does come down to customer service and what we are able to deliver for them. But I can tell you organizations like that also do their own channel checks or customer checks or reference checks. And they look up as to what kind of supplier and partner are we.
and i'm sure they did that diligence and we're really proud to have that account it's a component of the growth that we're seeing this year we have exceeded our own initial guidance a few times already in the pharma segment for the enterprise and it's partly driven by the the the volumes that we're seeing with our broader customers but also those new accounts that's about 10 billion dollars in new business that is coming online this year which is they are one of those components that's big now i know you've got this especially in generics now people
think, well, how can you make money in generics, in biosimilars? How could there be any margin for that? But I figured you wouldn't be doing it if there wasn't some way to make money. Sure. Well, I would think about-- I think it's important to step back. For the pharmaceutical industry, there's the 90/10 rule. 90% of the volume is generics, but it only is about 10% of the cost. So the volume is significant to our distribution channel and the supply chain. It helps give us the economies of scale to be able to go do a lot of other things.
And the price points are very, very low. But the margin per unit we make is relatively similar. So our margin rates are higher, but a lower price. Point is, it's a part of that whole basket of products that we provide to our customers. OK, last question I have is a little offbeat, but the big, beautiful bill. I mean, do you follow it closely in terms of what they're saying about Medicaid, Medicare as a observer or does some of this stuff directly impact you?
Well, I do take some trips to D.C. to make sure we are understanding and having our opinion and voice heard in these things. But it is very much a wait and see for the most part. We are very confident in our role in health care.
our essential role to safely, securely and efficiently deliver these products, these critical products to our customers. And there's there's no better way to do it than the way we are doing it. We're very confident of that role. So how we get compensated, you know, we'll continue to work with any of our customers as well as administration to figure that out. But at the end of the day, we provide incredible value for the one percent margin that we earn. And we're very comfortable. And when you hear these attacks by politicians, are they ill informed? They've been
They've been led to think that maybe you're somebody who is friction in this. No, not, not at all. Everyone, everyone we talked to understands our role, understands that we're the infrastructure. We are the supply chain and healthcare industry. We physically take the product from the manufacturer all the time.
the way to the end customer and patient. That is an absolutely essential service. And we're a public company, and our two key competitors are public companies. You can see what all of our margins are. There's no hiding the margin there. And so I think we have a lot of transparency and credibility with our role in the whole process. Well, I think so. I want to wish you the best of luck in your big analyst meeting. I'm sure it'll be as great as the one two years ago. Really said it. That's when I knew that this was a new company. And I always enjoyed the old guys. You know, I told you I had a good relationship with them, but I knew it was a new company, and it's a new company.
Much better companies why they recommend you. Terrific job. Jason Holler is the CEO of Cardinal Health, CAH, and you know I've been saying for a long time, this is the one to be in. They have money's back to bring. Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round. Next. It is time. I'm talking to the white room. I'm talking to the white room.
And then the lightning round is over. Are you ready? It's time for the lightning round. It's time with Brad in Connecticut. Brad. Hi, how are you, sir? I am good, Brad. What do you think of Biomarin? You know what? Biomarin, I am getting tired of the orphan drug model. I just not think it's working. I think it worked for some time. I don't think it works now. Let's go to Brian in Pennsylvania. Brian. Hey, Jim. Thanks for taking my call. Of course. What's up?
Jim, about five years ago, we bought some home security cameras for the house. The hardware has proven robust so far, and we're paying a monthly subscription fee. I found out the company is publicly traded, and right now they seem to be making a run at their all-time high. What is your opinion of Arlo Technologies?
You know, I've looked at ADT. I've not looked at Arlo. I'm going to have to give that a solid look. I'm sorry. You stumped me on that one. Let's go to Jonathan, Pennsylvania. Jonathan. Hey, Jim. Jonathan. Booyah. How are you doing, sir? Booyah to you. What's going on? You know, as a very happy club member, I'm so grateful to you and your club. Thank you. Jeff does such a great job. Thank you very much.
You guys are awesome. We pop it out with real stuff. Thank you. Thank you. Well, thank you for all the learning you've given to all of us. Thank you. And, Jim, with onshoring going on, tariffs,
whatever you want to call it, etc. What do you think the impact will be on transport and especially Union Pacific? I think it's good for them. And I think Union Pacific is the one that has lagged. I mean, I've seen a lot of them run. I've seen the truckers run Union Pacific. You got you got Jim Bennett there. I think it's a buy that you highlighted tonight because I think it's a really good stock to own. I need to go to J. J. J. J. J. J. J. J. J. J. J.
Yeah, good evening, Jim. This is Justin from Washington. I'm watching your show from my childhood and it's incredibly pleasing. Thank you. And your time-tested wisdom really helpful and you are fatherly figure for me. So I really appreciate it. Thank you. Thank you very much.
My question is regarding GitLab, GTL. Yeah, I thought that GitLab, frankly, I was prepared for your disappointment and I got it. This kind of collaborative software, enterprise software stock, I don't want right now. You know, I like an Oracle, which is going up, but that's data center. I don't want, I just do not want enterprise software. I think they're all too expensive. David in Georgia. David.
Jim, it's great to be with you, brother. I want to thank you and your team for the educating, entertaining process that you've put me through these last couple of years. Thank you. That's right. I need to do both. Thank you.
Jabbing yourself with an epinephrine needle, or should I say a harpoon's knot, an enjoyable experience. No. And for the first time in decades, brother, there's an option for children, adults with allergic reactions. It's an epinephrine nasal spray that received FDA and EU approval last year. Companies expanding internationally. Recent contract, $145 million upfront payment. On the heels of allergy season, is it a good time to act? ARF Pharmaceuticals.
You know what? I like their model. I've been analyzing spray myself, and I think that here's what I look at. It's a great flyer. Someone needs that technology. Someone's going to pay for it. Let's go to Cedric in Illinois. Cedric. Hey, how we doing? All right. How about you?
Good, good, man. Booyah, Jim. First time caller. All right. Appreciate you, man. My father, Cedric Sr., always talks about you. He says you're in a class of your own, and he's read all your books, man. Thank you. Thank you very much. And more ahead.
All right, man. Call us about NuScale. NuScale. Okay, here's the problem with NuScale. It is at really, really high. Here's the answer with NuScale. If it does an offering here, that's when I'd buy. I'd wait for the stock offering after what happened with Oaklo tonight. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.
Coming up, could an under-the-radar defense contractor provide your portfolio with some protection? Kramer's breaking down the name next. We all know the drill by now. You call in about a stock and I give you my take, sometimes positive, sometimes negative. But on very rare occasions, I need to take a look deeper before forming an opinion. Now, we've been running through our outstanding homework assignments like it's the end of the semester here at MadMoney. And tonight, I'm taking care of one more name that was added to the pile just a couple days ago.
On Monday night, Frank in California asked me about Amentum Holdings. It's a provider of advanced engineering and technology solutions that only started trading nine months ago. I said I'd get back to him on this one. Now, the business that eventually became Amentum was originally part of AECOM, the infrastructure consulting firm that I liked a lot ever since it came public. Back in January 2020, they sold their government services business to a pair of private equity firms, and Amentum was born.
Then in late 2023, we learned that Amentum was coming back to public markets via a really complicated transaction. They merged their entire business with Jacobs Solutions, Critical Missions Solutions, and Cyber and Intelligence Divisions. There's a mouthful. Now, we actually spoke to Jacobs CEO Bob Pagoda about this on a couple of occasions recently and asked specifically about the deal. He had a lot of positive things to say about this. The new company's prospects look great. Started trading again late last September. So what do we make of the present day Amentum?
The company operates through two main businesses. The first, Global Engineering Solutions, accounted for about 60% of total revenues last quarter. The segment's all about large-scale environmental remediation, clean energy, platform engineering, sustainment, and supply chain management, primarily for the U.S. government and other allied nations. The remaining 40% of the business comes from Digital Solutions Division, which provides advanced digital and data-driven solutions, including intelligence and analytics,
space systems development, cybersecurity, and next-generation IT solutions across the federal government, as well as commercial clients. While those are the two big operating segments, it might be better to look at a momentum through the lens of its end markets. The largest end market is defense.
which accounts for just under half the sales. The second largest ends market at $1 billion, about 17% of total sales. Here we're talking about the Department of State, Department of Justice, Department of Homeland Security. Environmental work represents about 15% of the business, thanks to the Department of Energy and the UK-based Nuclear Decommissioning Authority and Atomic Energy Authority.
Intelligence-related work makes up about 11% of the business. Again, their clients are federal agencies or their international compadres. Finally, space is about 10% of Mentors' revenue. That's NASA, Missile Defense Agency, the Space Force, and, yes, the Air Force.
Now, given this breakdown, it's a curious breakdown. You can understand that Amandum's work is heavily centered on government contracts. There's a strong defense tilt here, with nearly 70% of funding obligations coming from the Department of Defense. Overall, defense is a solid business to be in, although you have to start worrying if anyone in Washington starts taking that budget deficit seriously. Doesn't seem like a major priority, though.
Now, when Amentum reported its latest quarter in early May, the results were good. Better than expected revenues. A healthy earnings beat. Management reaffirmed the four-year earnings and cash flow guidance. Not bad. Sounds good. Then how come the stock dropped 4.5% the next day? Well, it seems that the market wasn't overly impressed with Amentum's growth story. While the company beat estimates, it still only posted 1% revenue growth year over year, and the earnings were just up to 4%. That's not good enough.
For a business that operates in high demand sectors like defense, energy and intelligence, some investors might they might be expecting better. I can see that. There are also broader concerns hanging over every government contractor right now, namely Doge. Although I don't see that doing much against this against a mention of another must is gone. Plus, in a mental case, these concerns seem overblown.
The company has really emphasized that they only expect a 1% revenue hit from the new administration's belt-tightening initiatives. Not bad. That resilience stems from how their business is structured. No single department or agency accounts for more than 15% of sales. 1-5. 1-5.
With strong exposure to critical areas like nuclear energy, intelligence, Indo-Pacific operations, hard to believe that Doge is going to see Indo-Pacific operations as a priority for spending cuts. After Secretary of Defense Pete Hicks just said that the threats to Taiwan from China could be imminent.
In fact, Amentum's laid out a long-term growth plan calling for 4% to 6% compound annual revenue growth from 2028. They haven't been able to gin up much excitement with that forecast. There's a lot of companies that are growing much faster that aren't that expensive, but I think they can hit these numbers.
Recent contract wins suggest their confidence isn't misplaced. Last quarter, Mentum announced over $1 billion in new intelligence contracts, and they were selected as program manager and the lead design engineer for Sizewell C. That's a next-generation nuclear power station in the U.K. Management also indicated that they have $29 billion in penny awards and remain on track to submit over $35 billion in proposals this year.
All this is happening amid long-term macro tailwinds and support the company's core end markets, rising geopolitical tensions, modernization demands across the defense sector, the need for supply chain resilience, humanitarian response, new environmental regulations, and evolving cybersecurity environment and evolving space race. You get the point.
Beyond the headlines, it's important to remember that Amentum isn't a newcomer to this space. It's made up of a series of legacy businesses with deep roots in federal contracting, businesses with incumbent status and longstanding agency relationships. This familiarity is something incredibly important when the governments decide where to allocate funds. They also have the scale to compete. Their $45 billion backlog is one of the highest in the sector.
This isn't some fly-by-night outfit that's going to have to fight tooth and nail for government contracts. This is a well-known commodity in a space where that really matters. Their commercial and international businesses deserve some attention, too. The business now represents about 20% of momentum sales and is growing faster than the U.S. government-based businesses.
If there's one thing that gives me pause about the stock, it seems that it will. And this is a kindle theme with it for many of our homework names. That's the ownership concentration. More than 35 percent of momentum is still owned by American securities and Lindsey Goldberg, the company's private former private equity sponsors. There's private overhang. It can be a real issue if these firms ever decide to unload their shares. We saw it, by the way, really badly in Dutchbrook.
And Portillo is, too. But the bottom line, while I'm worried about the private equity shareholders, I think this stock already has too much caution priced into it. Amentum sells for less than 10.5 times this year's earnings estimates. That's a pretty compelling valuation for a company with this kind of scale of long-term positioning. At the end of the day, I'd like to see some of the large shareholders
These private guys reduce their stakes before jumping in. But momentum is definitely worth keeping on your radar. It's kind of been forgotten. No one's focused on it. They should. And I want to thank Frank for bringing it to our attention. 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 Mad Money. I'm Jim Cramer. And I'm going to see you next time.
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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