Mad Money w/ Jim Cramer 3/4/26

IKEA presenterar Ljud av förändring. Elskling, vi fick det. Och ska inreda alla nya kanader. Välkommen till Ikea! What made you confident that you could do something that hadn't been done before? I have no fear of failure.

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The oil market always seems to know everything. I've seen it time and time again. We saw the same story play out today, and it was very good for the stock market. Dow Jones gaining two hundred and thirty-eight points, SP climbing point seven eight percent. And then that's that forty one point two nine percent because oil was at last, thank heavens. Ciao.

If you read about the war with Iran, you know what? You're going to find a continual theme. It's broadening, it's widening, it's getting ever more perilous. Yesterday the front page of many newspapers told a story of Iran's vast stockpile of missiles and drones, borderline limitless because their hardware's so cheap. Meanwhile, we, on the other hand, have the most advanced anti-missile systems in the world.

But every time we use them we spend millions to the point where we might not be able to defend our allies in the Gulf, and we will shortly be out of anti-drone missiles. As the war spreads, we were warned, the coalition might break up, countries could declare neutrality and preserve their populace and their tourism. And of course, ultimately, Iranians are blocking this trade of her moves, which should cause oil prices to soar.

hundred dollars anyone and the nasty war will morph into an ignominious peace. She was very reminiscent of the run up to the first Gulf War in nineteen ninety one, where we were ready for a long war, heavy casualties, and a resumption of an already elevated price of oil.

The one thing that was so strange back then though was as soon as the shooting started, oil began to plummet and the oil stock started rolling over. The US proceeded to crush the vaunted Iraqi Republican Guard, much to the chagrin of almost every commentator. Things returned to normal very quickly on the heels of the collapse of the major oils, and we had an incredible bull market. A new bull market. It was extraordinary. Now I'm starting to wonder if something similar could happen right now.

We all read the stories about how the genius Iranians were playing the long game with barrage just beginning, accelerating each day as we ran out of ammo. Now it looks like the first big day of drone and missile activity, maybe the last big day of drone and missile activity. Maybe it's the decapitation of the Iranian military. Well, we've taken out enough of their hardware.

But there seems to be a lessening of the endless wave of projectiles. More important, like the start of the war in nineteen ninety one, the oil stocks were for sale. And those lines those declines told you maybe everything was gonna be Sure the all staff could be wrong, right?

Uh but right now they're saying that the Gulf will be reopened, the US will protect the ships, and the price of crude has seen its peak. You don't get ExxonConico and Halbert and all down one or two percent if the Straits of Removers will be really closed for a long period of time. It doesn't work like that. So what happens if the war winds down and we get a defanged Iran? Maybe we should be thinking about that.

Because I'll tell you what happens. We're gonna go back to where before we started, which is why I was so adamant that you avoid the panic earlier this week and not blow out of stocks on that first day. If you remember, that was the entire top. Because I didn't want you to go. What's amazing is that like almost every snapback rally after real hammering, buyers return to the tried and true. First they go for the highest risk stocks, not the lowest, but the highest.

That's a little magical investing there as well as Bitcoin, which we know now trades with the bullish animal spirits that could be unleashed by some good news out of the Middle East. It has nothing to do with safety. Coinbase and Robinhood sword, nothing to do with safety. Hey by the way, so did the storage play, Western Digital. You saw Op Lovin' and Moderna shot higher two classic risky stock.

In fact, today's winners look very similar to what worked after the end of a very different kind of crisis, the collapse of Silicon Valley Bank roughly three years ago. Let's run them down. First I want to talk CrowdStrike, my favorite cybersecurity company. George Kurtz, the CEO is on tonight. Crowdstrace is the best of the best, but Its stock has been crushed down thirteen percent for the year. Why?

It's been caught in the massed exodus of money from enterprise sold because investors are worried that they'll all be replaced by AI agents. At the heart of this trade, there's the grim agentic vibe coating reaper that is anthlopping.

At the time of its last fundraising a couple weeks ago, Anthropic seemed to be pumping out press release after press release at the press release about how it's going after every software vertical under the sun. Anytime Anthropic would announce that it was intruding to a new software business, the stocks of the incumbent would simply sell. The last line of business anthropogant tend to disrupt after just Just scything everybody. Cybersecurity.

Anthropic explained that it could protect AI agents from themselves, that there would be no holes in them, that they'd be secure. The result CrowdStrike stock fell from four hundred and twenty to three hundred and fifty. People told me, get out of the way, Jim, this one's going much lower. Sellers didn't think to stop and maybe say, Oh, could anthropic really mimic CrowdStrike? Could they do it for a fraction of the cost? I know I was in disbelief that the stock could plummet like that.

CrowdStrike doesn't provide a dashboard or help sell something or put something or order a on make onboarding better. It's a mission critical company, as George said on the conference school last night. Quote in cybersecurity you simply ha can't have a hallucination. You can't prompt twice, it's first time final. It's the difference between thwarting an adversary or experiencing a breach, end quote. And that is not something the anthropic can do, and if the anthropic were here right now

High anthropic, they would say they couldn't do it either. Last night, CrowdStrike reported an incredible quarter. I maybe one of the best in the entire winter. George, tireless, as befits the winner of Le Mans That's that twenty four hour road race. Explain again how craft strike's not traditional software, meaning it's not so much fodder for our th our anthropics cannons.

He explained that CrowdStrike specializes in protecting institutions from cyber attacks, a business that has nothing to do with anthropic m moving into. And and once again it it does seem almost humorous. And once again it seemed to fall in death ears falling by the way at the opening today double digits. But then as if by magic, William Jennings Bryan used that phrase.

Uh you got the gloom of Iran burst you know kind of blowing away, the decline in oil, and the next thing you know the market actually heard what George had to say. It's the first time any company have been able to change the AI road kill narrative about itself. First time? The line has been drawing in cybersecurity. The stock exploded higher, only finishing up four percent.

Anthropic didn't get to this one. Then we saw a strength in two other tech stocks that had giv that many people had given up on I'm squitting I'm I was not tiring of them, but I was I I didn't copy down. Amazon and NVIDIA. Ever since Amazon reported last quarter, uh and its stock fell from two hundred and forty two down to one hundred and ninety-eight over a two-week period.

The stock couldn't find its footing, but not today. Amazon finally managed to actually break out of its negative range and burst higher, rallying eight dollars almost four percent. Maybe there's a recognition that Amazon Web Services is not gonna be wiped out by anthropic. And then once again, NVIDIA started a new climb, rallying almost three bucks. Is the the NVIDIA of you're back with us?

Oh that'd be a remarkable thing. Incredible how there was no real news flow, nothing really positive about either Amazon or NVIDIA. Equally amazing, the big rallies in these stocks are not correlated with any news whatsoever. They purely correlate with Sentiment. Positive sentiment first and then reasons later.

Look, here's the bottom line. We don't know if the Iranians are out of drones or out of leaders, although the oil stocks indicate that the war is heading the right direction. We do know that we may have found the limits of software company destruction by via anthropics.

And may have seen a resumption in the buying of high quality stocks after a war that some still expect to be long and drawn out. But I'm starting to think maybe that's not the case. Hey, I say we go to Buddy in Rhode Island. Buddy! Hi Jim, this is Buddy. I just want to let you know I just bought you a book, How to Make Money in Any Market. You're a good man. But this book is about trying to get it so everybody, your kids, you, your parents, your grandparents, understand what a stock is.

It's real simple. Thank you so much. You're very, very welcome. I have a question on Z scale. I know that I own it at two fifty. I can buy it right now at one fifty six. I know that they have some in um issues with the the buying of red canary and I also know there was some question about stock based compensation affecting earnings.

Um I know they talked about the rule of sixty two as opposed to the rule of forty of the conference call, and I believe it got people kinda confused. At the same time, I owned CrowdStrike, I own Rubrik, and I own Cloudflare. And I'm wondering if I should um leverage out the Z scale. I would own it at two oh three. 250 and 156.

uh would average out of two or three. Is that the best way for me to go? She's done it, buddy, you got a tough one because first of all I like everything you have. But second I would say Z Scaler, I would not sell it here, but I would want to sell it if you've got all those other stocks Get that bounce going. We're starting to see some of these stocks really bounce.

You have too many of these kinds of stocks and there's too many days of paint and I don't want you to have that much paint because you'll end up leaving. But thank you for the kind words and thank you for buying how to make money. We may have found the limits of our software stock destruction. Tonight the war in the Middle East is highlighting the need for strong cybersecurity here. One of the biggest IPOs in the year has been surging. I'm taking a look at data center play.

Power solutions. You ask me about it. I give you an answer. And Target has been staging quite a turnaround lately to see. I'm gonna take a push. the retail giant that everybody used to love, maybe they can love it again. With creep. Have a question? Tweet Kramer. Add mentions. Send Jim an email. Call at 1-800-743-0. Sous-titrage ST' 501 เป็นเกิดว่าเกิดว่าเกิดว่าเกิดว่าเกิดว่าเกิดว่าเกิดว่าเกิดว่าเกิดว่า

I have no fear of failure. Trail Blazing Women, Changing the Game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. life is short and you just gotta think big to accomplish big things. And hosts CNBC. Power players. Every Tuesday wherever you get your podcast.

Lately, the cybersecurity stocks have been hammered by the same AI displacement workers that cost the rest of Enterprise Software Co-work. Like it's just another kind of piece of software. I was that was crazy. Kate CrowdStrike, that's a key position from Charlotte Trust. Last night the cut reported an excellent quarter. The stock rallied more than four percent today, but it's still down more than thirteen percent for the year.

Uh, could this be the buying opportunity we're looking for? Let's check in with George Kurtz, the founder and CEO of CrowdStrike, to get a better read on the quarter and what comes next. Mr. Curtis, welcome back to Mad Money. Great to be here, Jim. Well thank you, George. I actually I want to try to hit two themes with the first question. We always know that when you have these actions like what's going on in Iran, that there are bad actors who try to mess up our system and play basically put it

Put us down, uh and although uh there are some great things happening in AI, it would really be only CrowdStrike that could detect and try to stop that behavior. Are you seeing anything like that this time? We're certainly seeing activity out of Iran and whenever you see uh uh geopolitical tensions rise, which obviously they have been, you're gonna see cyber activity connected to kinetic activity.

And when you think about uh the activity and the actions that the the government's taking, it's not just about government on government. Uh you can think about the transport sector, the shipping sector, uh energy, telecommunications. These are all cyber targets. for the Iranians and again we've seen uh increased activity in those areas. And sympathetic uh entities to the Iranians? Are they out there doing things? Well you have lots of hackists, you have lots of nation state actors.

Uh as you might imagine there's um a lot of activity. So you'll even have other nation states trying to figure out what's happening. and uh also trying to hide behind some of the noise that's out there. Excellent. Now, George, you came out at th in this call and I've read every single call you've ever had and they've all been great.

This one you came out swinging. You basically said, look, you got people listen how much money we're making. Talk about this, you know, the uh annual recurring revenue, and you put up some incredible numbers. It came out so tough this time. Did you want to say to people, look, this is not what you think it is? Well, yeah, uh Jim, let's start with the numbers because the numbers don't lie. We crossed the$5 billion annual recurring revenue mark,$5.25 billion.

as the first and only Pure Play cybersecurity company, software company to do that, which is incredible. So an incredible year. If you look at the net new annual recurring revenue, that was three hundred and thirty one million or forty seven percent year on year growth, incredible at our scale, and we're a free cash flow machine. In terms of uh our free cash flow is three hundred and seventy six million dollars with a rule.

of fifty two, free cash flow rule of fifty two. So these stats are a rarefied area. We couldn't be prouder of our results. Now but I want to get into what I think has been ailing the stock and has nothing to do with your numbers, which are extraordinary. Although of course the stock started down five as if nothing in the narrative had changed. You took things Just head on.

Uh you say they're historically nice to have technologies that are previous with productivity uh features and point products good for legacy models. And then there's what you guys do, mission critical. What you basically seem to divide the world into is kind of older technology that gives you a kind of a a dashboard. And then the new technology, which is you, not necessarily the AI agents that we fall in love with.

Well that's right. There's the nice to have, category one, which uh will see disruption, and then there's mission critical infrastructure that are what I call net data creators. We create real-time telemetry. We have visibility across 176 countries in tens and tens and tens of millions of different endpoints and telemetry points that are out there.

We are the tip of the spear for what's happening in security, and this is proprietary data that we've trained our own models on over the last 10 plus years. This is a structural moat for us. And you have to look at the agents that we created, the software agents or sensors that run on all these computers.

This is a very hard thing to replicate. They're mission critical. You're not gonna vibe code your way into a mission critical critical agent, which is what we've created. Uh you can't prompt twice. It's first time final. What does that mean? What that means is and Jim, you're a big consumer of AI. We've talked about all the various platforms that are out there. You use them all.

And you have seen firsthand as I have, if you ask the same question three times you get three different answers. Or if you ask a question, you know, sometimes you ask a sports question and you get results from like a decade ago. Um so these sort of hallucinations are not possible insecurity. You have to have first time final. You have to be in the path

of a breach and you have to be able to make a decision with 99.9% precision and stop it in real time. A large language model is not going to stop a breach in real time and it's not in that decision and closed loop path. So that's what I mean. First time final is you got one shot to make a decision. You better be right. And just given there's plenty of benefits of large language models, but real time and precision are not

Uh one of the benefits. Right now, I want people to understand that we're l we're listening to a man that has unbelievable respect. For anthropic works with them both ways. Anthropic loves you guys. But one thing that is certain: if you do have a breach and you're using anthropic, so to speak, as a cybersecurity company. There isn't any George Kurtz.

Well I I think there's a few things, right? Which is um I mean it took me and the and the entire CrowdStrike team fifteen plus years to build this incredible platform with the data that we have and all the things that I've talked about. Um but putting that aside. You have to look at the organization behind the technology. We stand behind our technology, people know who to call.

Uh I got a call this morning from a CISO who needed something immediately based upon some activity that was happening in Middle East. And we were there. We got everything provisioned literally within fifteen minutes. That's the kind of service that people expect. And it's the domain knowledge that you have in security and the fact that you have to stand behind technologies that are battle tested, which is why the large enterprises

uh have adopted CrowdStrike and again the success is in the numbers. But as you said, we work with Anthropic, we work with the other uh labs. It's fantastic technology and it complements what we do And in providing the best outcomes for customers. But the fact is that an agent itself is never gonna be able to defend itself. The data must be protected. And then one of the things I think that you offer the other people to realize, you know the bad actor.

I mean Anthropic doesn't know and A OpenAI they don't know who the bad actor. You probably have a list of all the bad actors and what they do and how to stop. Well Jim, this is a critical point and that is the security data, the threat intelligence. The incident response that we do, we we respond to some of the largest breaches around the planet. We know how the threat actors work, we have the data, and it's it's proprietary in our system.

So when you think about the training models, we're not training on just internet data and scraping, you know, Reddit, right? We are the tip of the the spear in terms of the managed detection response business we have. We know how it works, we've instrumented. And that's a huge advantage, this sort of data fly wheel that we have. The network effect is incredible. And that's why leave it with this, I want you to go into this.

There's a lot of companies that are in denial, and they know that it's really a a headwind for them. But when I look at all the data that's being created and all the agents and all the one person equals a hundred agents. I say to myself, there's going to be so much, maybe a factor of ten, the amount of business that CrowdStrike has had. This is the ultimate tailwind for your company.

That's right, Jim. You know, we talked about some of our structural modes, but the most important thing is the tailwind. And what we've seen is that if you want to create AI, you need GPUs, and if you want to secure AI, you need CrowdStrike. And we're an accelerant to AI adoption. We have customers, CEOs, boards. I was on a board call two days ago. Their number one question was How do we safely deploy AI in a compliant way?

So we are s we look at ourselves as a way to help accelerate the adoption of AI in any form, and that's ultimately good for customers, that's good for us, it's good for the lab providers. And that is a massive tailwind. And what I called out in the earnings call is if you remember this whole cloud revolution, there's a lot of

Pundits that thought, well, the cloud providers, the hyperscalers, we're gonna create all this security and and the security companies are gonna go out of business. Didn't happen. You know what happened? There were more threats, there were more attack surface uh that we needed to protect and at the end of the day the the hyperscaler became a massive channel for us. I called out in the earnings transcript AWS one point five billion dollars in their marketplace.

So it's all an accelerant and a tailwind as you pointed out. We have to separate there are indeed some companies where it's a terrible headwind and we see their stocks go down and then there are others where it's a great tailwind and we also seen their stocks go down. The latter That's George Kirkz, CrowdStrike founder and CEO. Great to be here, Jeff. Coming up. So what does Kramer think of the company?

What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trail Blazing Women Changing the Game. One of my favorite pieces of advice. Think about what your body. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. New episodes every Tuesday wherever you get your podcasts.

On Monday night, I got a call from Sari in Illinois who wanted to know about Forgent Power Solutions. A company that just came public a month ago. I liked it so much I told her, you know what, I'm gonna do a whole piece on this. The truth is, I've been watching this fortune like a hawk.

It's the biggest IPO of the year so far and stock has already climbed from twenty-seven bucks for King Public to thirty-four and change. Now these guys make electrical distribution equipment and last year they got forty-two percent of their sales. From the data center. That was easy. Yeah, twenty-three percent coming from the electrical grid, nineteen percent coming from industrial and market.

Fortune's one among a small number of companies that can engineer all the electrical distribution equipment you need to get a data center running, with some of the highest levels of customization and shortest lead times in the industry. There's a reason the staff's been doing so well since it came public.

It's a terrific play on the hottest theme in the market. The Great AI Data Center Build-Out. Now the story's a good one, and the numbers are pretty darn good too. In Fortune's Fiscal 2025, which ended last June. They put up fifty-six percent revenue growth in their first quarter of the twenty twenty-six fiscal year, the third quarter of last year. If you're working off the ka uh normal calendar, the company had eighty-four percent revenue growth.

Walter says that demand for its products is growing rapidly thanks to the rise, of course, of the data center, which also is forcing independent power producers to add capacity and upgrade the power grid, as you well know by now. Hey, by the way. The quiet period for forging annual on Tuesday. So we have a fresh set of annual assessments for the company's growth going forward. The street expects them to put up forty-one percent revenue growth in the current first fiscal year.

Uh and and longer term, the analyst consensus says the company's revenue could rise at thirty seven percent compound annual growth rate through twenty twenty nine. That's among the highest companies that I know. Have a profitability. Okay. Fortune's already profitable. Although just how profitable depends on which metric you're looking at.

If if let's say we go by the most stringent standards, gap net income, Forgent made$17.4 million in 2025. In their most recent quarter, the first of fiscal 2026, They had fifteen point six million in gap net income up a hundred and twelve percent year over year. But if you look at the smoothed out adjusted numbers, no not plain gap, but adjusted.

You get a much cleaner picture of what's really going on here in Fortune's profitability. In fiscal 2025, Fortune had adjusted earnings before interest taxes depreciation amorization of$169.2 million. Now that that is up 70.5% year over year. In first quarter of fiscal 2026, their adjusted EBITDA was sixty-five point one million dollars, up fifty point six percent year over year. For both of these periods, we're looking at an adjusted EBITDA margin in the low to mid-20s. That's not bad.

Finally, Fortune offers adjusted debt income numbers. I know there's a lot of numbers I'm throwing at you, but these add back some one-time and uh uh other say non-cash costs, and those look even more solid, especially in the last couple of quarters. Now, all that said. There's one thing to consider here. You gotta remember that the company now known as Forge and Power Solutions.

was actually assembled piecemeal over the past few years by a private equity firm, NEO's Partners. They made a series of electrical equipment acquisitions 2023 and 2024. After reorganization of the business in the fall of 2024, they brought in a new CEO. Vertiv veteran Gary Niederpruim, who took over in May of last year. Vertiv's a data center pro, so that's a terrific credit. Great bloodlines, I guess you could say. A few months later, the combined business was rebranded Forging Power Solution.

Now there's a couple of extra considerations I need you to put in front of you. First, when you see this roll-up, and this is a roll-up type structure, you normally want to make sure the growth stats aren't being inflated by MA activity. They're not buying growth. But I'm not worried. Why? Fortune sp has got 84% revenue growth in the most recently reported quarter. It's that's an organic number.

They said that that explicitly in the prospectus, and then was they didn't buy that number, it's organic, they grew it. Company hasn't completed an acquisition since June of 2024. Second, whenever you there's an IPO with a private equity sponsor, we've got to be a little wearing. You should watch the balance sheet because the standard private equity playbook is to buy a company, then load it up with debt, ideally improving the business as well before s uh bringing it public.

But again, that doesn't seem to be a concern here, in part because Fortune was able to use some of the IPO proceeds to pay off old debt. In this case, the balance sheet's relatively clean. Fortune has a leverage ratio of 1.4, which is really nothing to worry about.

Now the one private equity worry that does apply here is the fact that NIOS, the sponsor, has a concentrated ownership stake in Forging and will continue to control the company. Specifically, they still own roughly 79% of the business. And some day they're gonna want to ring the registr. When NEO starts selling down at stakes, something that won't happen though for at least five months as there's a lockup play, I think that's gonna put some real pressure on the stock. I it really will.

Finally, let's talk press. Luckily we've got a good comparison here, which is the aforementioned Vertive, another electrical equipment maker with big data center exposure. If we adjust Forgeon's calendar using the next four quarters of estimates We find that Portugal has an enterprise multiple of 27. That's pretty darn high compared to most industrial companies, but not compared to Verde, which has an enterprise multiple of 29.5 based on its 2026 estimates.

Given all the positives here, I think V Verde really does deserve a premium multiple. So yeah, it's expensive, but it's still cheaper than the closest competitor. I like that. Here's the bottom line. I like forging power solutions. In fact, I borderline love it.

Stocks had a great start. And while it seems pricey, I think the valuation is justifiable when you look at Verdam. In my view, fortune's worth buying right here, right now. Company reports in two weeks. If you want to wait uh maybe you wanna wait and see what happens there. But maybe there'll be some reason for w forging to pull back.

giving you a better buying opportunity. Then again, maybe they'll tell such a good story that you want to buy more anyways. Thank you to Sari in Illinois for the nudge. I like the look of this one. Put half of it on now and half of it on after it reports. Isha and Georgia.

Booyah Mr Kramer, this is Ash. I'm here with your biggest little fan. He just turned three last quarter and his growth is off the charts. He's already learned many key fundamentals from you, like red or bear is down, green or bull is up. He's been curious to learn about a retail he's curious about a retailer that's been trending red lately. So here's this one with this question. Go. What do you think about? Home Depot. Oh my god, that kid is a he stays in the picture, his options smartest

Smartest three year old is ever. I I can comp it twenty one years. Smartest smartest three year old ever. Home Depot, Big Position by Travel Trust. It's been uh problematic, but we have it on because rates are gonna get cut and you have to own the stock when rates get cut. Three-year-old kid, man, we got the whole demo covered here. I borderline love forging solutions.

I think it's worth buying at these levels. Of course there's some viewer who called and gave it to us. We didn't do it on our own. Watch Wormate Money Hip. Quitting my deep dive into one of the only names that was in the green yesterday during a sea of red. Did today's market rally catch you by surprise? I'm giving you my method for anticipating these market swings and you're gonna love it. And all your calls rabbit fire tonight's this of the lightning round. So stay with Kramer!

Now you might not have noticed with the whirlwind, but this is the retail week of earnings season. And yesterday we had a much better than expected quarter from Target, which had been struggling for years, but it's now under a new map. From its highs in twenty twenty one to its lows last November, this stock lost an astonishing sixty-nine percent of its value.

Now it was a death by a thousand cut situation. Target seemed to make poor merchandising decisions, it had trouble managing its inventory, the in-store experience kept deteriorating, and eventually it couldn't compete on price. Ending its long standing price matching policy last summer. Just a disaster. Last August, though, the company announced that longtime CEO Brian Cornell would be retiring, to be replaced by the old chief operating officer, Michael Fidelki, effective on february one.

Some people didn't like the choice of Fidelki. Given the stock's underperformance, they wanted to bring an outsider to shake things up. But very quietly target stocks started. just gaining some real traction in the final weeks of last year, despite the fact that they reported another dismal quarter in November.

The stock fell nearly three percent in response to that last quarter, but it bottomed the very next day. At the lowest target was selling for less than twelve tons forward earnings, and the stock yielded roughly five point five percent. This is target for heaven's sake. Clearly, it earned some attention as value play, though, rallying from eighty-three dollars in November to$113 as of Monday's close. Maybe it should never have been down at eighty-three dollars.

Then yesterday Target reported a surprisingly strong quarter. The revenues came in a little light. The same store sales were down 3.9% for physical stores. But their margins, the gross margins expanded substantially, allowing the company to deliver 28 cent earnings beat off a$2.16 basis.

Looking forward, Target said expects net sales to grow quote around two percent and quote, with a quote, small increase in comparable sales, end quote, as new store openings and they're gonna have store openings in places where there are no major stores right now in the country, and non merchandise sales contribute

quote, more than one percentage point of growth, end quote. Now on top of that, Target said it expects to grow net sales in every quarter of the year. Management's predicting an adjusted operating margin of four point eight percent, which would be up to four point six percent in twenty twenty five. And was certainly better than the four point five percent number that the analysts were anticipating. I was kind of my jaw dropped when I saw how a positive they're gonna be.

Now overall Target believes it can earn seven dollars and fifty cents to eight fifty per share for the full year, much higher than the dollar sep than the seven dollars and sixty three cents number that Wall Street was looking for.

But it sounds like the earnings growth will be weighted to the back half of the year as target said the first quarter earnings will be flat to up slightly from last year, with stronger growth coming over the next nine months. So if you're gonna get behind target here, it takes a little trust. You have to believe management can deliver on the rest of the year, even after a softer than expected first quarter, which I by the way don't think is in the cards.

Still the stock caught fire yesterday, rallying from one hundred and thirteen dollars to one hundred and twenty and change despite the terrible tape, because targets managed to change the narrative. Now remember he came in here, you know, he was. Uh all the credit. How about that? For the reported quarter, target said the food and beverage, beauty and toys delivered net sales growth over year, year over year, while their essentials and home categories also had stronger trends.

Non-merchandise sales were priced by two. They grew over twenty-five percent in the fourth quarter, membership revenue more than doubling year over year, and targets in-house advertising business Rondale. Double digits while marketplace revenue was up 30%. Same-day delivery grew 30% in the quarter. More important, management said that sales and traffic trends.

accelerated in the last two months of the quarter, which is always a good thing to hear from a retailer. And that I tell you, if any one thing moved this stock, it was what's called the cadence that February came in Good and left. Great. So uh when you give the reins to Redel Fidelki in uh November, you actually in in February you actually had some good

Now beyond the quarterly report, Target also rolled out its new strategic plan, hosted a financial community meeting in the hometown of Minneapolis. Boy, there was a lot in here. The company plans to invest in incredible Incr incremental, incredible, two billion dollars this year, including more than one billion dollars in additional capital expenditures and another billion dollars of operating investments, all to boost growth. Make these downy stores look better.

Target laid out plans to transform its in-store floor plans and displays while also increasing payroll and training so that their staff can make the shopping experience more pleasant. They also plan to improve their product assorbent in key categories. At the event, Target Tees plans for a more immersive, trend-forward approach to sports, play, gadgets, and pop culture, areas where Target believes it has a right to win.

They also taken this approach to to more stay but important categories like baby, home, food and beverage and beauty. By the way, they told me that they were very disappointed in home. They just really they said, we've got to fix home. Couldn't agree more by the way.

Finally management said they'd be accelerating their tech rollout, including AI, quote, to make shopping easier and more personalized, end quote, they have to do that. These are all long standing issues, and I'm glad that the company's working to fix them. Clearly the market agrees given the target stock jumped nearly seven percent. Yes, sir.

Overnight every analyst that covers the company seemed to be raising their price targets and two different firms upgraded the stock. Bernstein essentially covered their short. They went from fr uh from underperformed to market performed while taking their price target from ninety one to one hundred and sixteen. Bravo.

Retail specialist Tel C advisory was even more enthusiastic, taking target from market performed to outperform while boosting their price target from 110 to 145. So have I become a believer in target under new management? Honestly, yes. I am a believer. I could leave her if I tried, at least for now.

The new management team will have to deliver on the promises that it made yesterday, and I'll need to see some same-store sales turn positive, along with continued margin improvement and legitimate earnings growth before full buying fully buying in. But it's tough not to be encouraged by what we heard yesterday.

Target was already improving before the management handover, and now the new regime has a bunch of plans to keep that going. The most important thing in my opinion is that the new management team seems to have a very good grasp of what the company's been doing wrong. And they're not afraid to admit those mistakes. The first step, as they say, is acceptance. And target's now well beyond that first step, moving on to the point where they're rectifying their most pressing problem.

Again, the proof will be in the pudding. These guys still need to deliver. Better numbers will have to follow this period of better vibes and big plans. But with Target currently selling for still just fifteen times its midpoint of its new earnings forecast, while Walmart trades it nearly forty-four times and Costco trades it almost fifty times. Well the bottom line is Target stock, it could still here be considered a steal. It's just way too cheap.

I think he's worth betting on their money's back. Fire lightning. It is time it's time for the wide run cushion.

Are you ready? Steve Dad on the late on Christmas show with Eric and Miskin Eric. Jim, I love the show. Aw, thank you, buddy. What's happening? I am calling about a fintech company that may not be solely dependent on lower rates. Jim, with the recent acquisition of Redfin and Mr. Cooper, Rocket now owns the ecosystem from search redfin to loan rocket to servicing Mr. Cooper.

Cooper. They also just announced a strategic alliance with Compass. Jim, can you see this stock doubling once the housing market under the No I cannot. No, I think there's just too many headwinds to housing. I'd love to be more bullish. Uh we own Home Depot for my travel trust. One of my worst positions actually right now, I've got to tell you, I don't want you to be big in rocket. I don't think you'll make a lot of money. Let's go to Don in Florida. Don!

Good evening, Mr. Kramer. Pleasure speaking with you again. So um I've been I've been watching your morning meetings every morning with you and Jeff Marks. I feel like it's made me a much better, wiser investor and it's been a pleasure being a member of the club. I got a couple questions for you. Sure.

Sure. So this stock's beaten me down a little bit and it's confusing for me. For the past three months it's beat the earning projections. It's close to a 52-week low. It's got an attractive PE less than 20 a good yield, 3.2%. The fundamentals are all green, Jim, but why can't Accenture get any traction going forward? I don't know Mass. I t I opened the file on them again yesterday after I saw that they bought this really interesting business. Uh

From Ziff Davis. And I said, Jeez, what is Julie Sweat and that that stock so low? And then I realized, you know what? It shouldn't be that low. I think you're owned or something. And let's go to uh Redmond in uh California, Redmond. uh long time listener from the first day I thank you so much for everything you do uh for us. Uh and I learned so much from you. I have a question about a stock that I wanted to add to my portfolio but I've always learned from you about that we should seek

conviction from the CEO and insider buying. Every time I wanted to buy this company I checked uh the insider buying and selling and I saw three sales only in the last six months, probably worth about hundreds. In August, September, even as recent as January. Uh so should I be concerned the company I wanted to uh add to my portfolio is a firm. Should I Oh no I like a firm. I like a firm, I like Max Laptown, like a firm.

I think it's a really attractive level. I couldn't believe that people that might be able to buy it under 50. I would say pull the trigger for. Alright, let's go to Tom in New York. Tom. Jim I'll get right to the point. Paychecks. The long knives are out for paychecks. I think that paychecks is doing well. I want to buy it at 17 with a four with a four and a half percent yield. I'm not sticking my neck out because I'm not worried. I think that that's a good company and it shouldn't be this.

Um let's go Jersey Gary. Hey, good afternoon Jim. Thank you for taking my call and really enjoy this show. Thank you. Oh, wondering your thoughts on this company that you and I pay every month. Right now it's down about eight percent off its fifty two week high. They just increased their dividend by six percent. Do you think it's a buy? P E G. No, actually I was talking to my my friend Rudding Pal Matt Horween. I'm not as big enthusiast as the bomb.

market right here and that's going to be what determines public service. I don't want you to buy any. And that legend we put it up.

When I was on the trading desk for two decades, I very quickly learned the lingo. The conversations on the desk were always opaque and conspiratorial. It always started with a they, as in they are buying Bitcoin or they're bailing from enterprise software. That insight would be followed by the most glaring of examples of what they want.

You might ask, what the heck are you talking about? There is no they. There's no one stock or two or three that they want that should be bought because everyone's buying it. Now a lot of what I do in the show is teach. I don't try to teach trading though, which is almost impossible to do well unless you're doing this a full-time job. I want you in, not out. But with this volatile market, you need to know how to spot what kind of day might be in the office.

That way you can avoid getting smoked if things go south. Right now! It all starts in South Korea, one of the most exciting markets in the world, a gigantic number of traders there, even if a huge chunk of it comes down to trading two companies, Samsung and SK Heinex, both of which have big exposure to computer memory in the data center.

These stocks have been making parabolic moves higher, but they've fallen apart in the recent days. Samsung's up 215% in the last 12 months, but it's down more than 15% in the last five days. including a twelve percent decline last night. SK Heinnix has rallied over three hundred and fifty percent the last twelve months, but it's dropped more than sixteen percent over the last five days, down ten percent in the last day.

This correction in the Cosby has been the worst in ages, largely because of these two stocks represent more than half the index. I like to get up early. Uh that's not you know, in reality I have a huge problem sleeping. When I come downstairs these days, the first thing I do is go to Gemini and get prices for those two Korean memory stocks.

Then I read the paper, skim some research, and then put on Morgan Brennan, the anchor of Worldwide Exchange on our 5 a.m. show. I look at what's called the crawl, the line of stocks at the bottom of the screen. I write down the stocks I see trading repeatedly. In the first two days of this week, everything tech was Craig'd down, Micron Sanders, Sea Gate, Western Digital.

Not today. Today I saw the opposite. A true divergence. I saw Memory King Sanders trading rapidly, trading higher and higher and higher. And I screamed to no one in particular. I can't believe it. They're taking up sand disk. They're going to go for micron. The linkage is broken. Now, we don't know who they might be. But whoever it is, they weren't even trying to disguise their buys. They were the teller were going to have a rebound, the risky stock.

Something became more obvious when I saw that Bitcoin was flying, Bitcoin being a perfect proxy only for one thing, people buying the riskiest stuff. That was all you needed to know about today's session. I mean you knew by 5.30. 5.30 a.m. you knew what was gonna happen. They means the people who are motivated, the ones who determined prices with their own buying. They decided the cost was done going down. It was time to buy the semis here.

Now I know this sounds almost too crazy to believe. How about Iran? How about the drones? How about the Gulf? Which I say, sure, it could reverse things, but remember I'm not giving you a fundamental call here. I'm telling you what you could see from the trading desk, which is now replaced by my kitchen table.

I went to work with confidence that we could have a strong market because they were buying the hottest stuff and it would spill over to the rest of tech. And you know what? That's exactly what happened. Am I a seer? Nah, just bit on the desk with two eyes and of course a conspiratorial frame of mind. You don't blame it?

Okay, try my exercise tomorrow. You won't believe how obvious it is all once you suspend your critical faculties and notice what they are taking up and how you too can tell what's most likely gonna happen when the session opens and things start to trade in the regular hours of the morning. Just be prepared to wake up at 3.30 a.m. like me, because sleeping in is how they get you. Alexa has always been working on my property just for your ear, man. Money I'd do favor. See you tomorrow!

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You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable. But neither CNBC nor its affiliates andor subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit CNBC dot com forward slash madmoney disclaimer.

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