Mad Money w/ Jim Cramer 10/7/26

0:00There are three kinds of investors that listen to this show. Those protecting what they've got, those looking for solid returns, and those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash mad. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. If you're a small business, the right hire can be make or break. Indeed Sponsored Jobs gets you quality candidates when you need them most.

0:37Join the 3.3 million employers worldwide that use Indeed to connect with quality talent that fits their needs. Listeners of this show will get a$75 sponsored job credit to help get your job the premium status it deserves at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed Sponsored Jobs. My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a boom market somewhere, and I promise to help you find it. Mad Money starts now.

1:17Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I'll do my friends. I'll try and make some money. My job, not to entertain, but educate, do some teaching. Call me 1-800-743-CBC. Tweet me, Jim Cramer. Back in the day, we used to just sit on our hands until we got the Treasury bond auction results. I can't believe it, but we're doing it again. That's right. A little more than 30 years ago, with interest rates higher than they are now, the U.S. government seemed constantly to be issuing new Treasuries to pay its bills. We had nowhere near the debt we have now. In fact, the government was well on its way to balancing the budget.

1:54It almost seems quaint in respect. But we know one thing at my old hedge fund where I traded stocks and bonds with abandon. If we had a bad treasury auction, one that was poorly received and interest rates instantly moved higher, then we were chumps if we had bought any stocks we liked before those results had come out. After a bad treasury auction, rates would soar and the stock market would get slammed.

2:20Back then, we had to wait until 2 p.m. to get the results. Now we get them at 1 o 'clock. Today's auction was okay, but it wasn't inspirational, and we ended up having a similarly just-okay session, with the Dow sinking through in 41 points. That's a bit dipping 0.22%. Now it's actually declining 0.22%. Now, if the auction had gone better, though, we probably would have had a much better day. Now let's understand each other. Any market where you need to wait to see the results of a treasury auction is simply not as good a market where you don't care about them. Every time you add a new variable to the equation, it makes owning stocks tougher.

2:51Anything that makes stocks tougher to own will push money onto the sidelines, especially after the sidelines start paying real good money. Why did stocks react so quickly to the sudden bond movements after auctions back then? Why did they go down almost every time an auction was weak? Because bonds pervaded everything back then. So many companies depend on credit, either for themselves or their customers, and credit costs for everything, and everyone would go up every time we had a lousy treasury auction. If the U.S. government had to pay higher interest rates to get money to pay its bills, you better believe so would Caterpillar, Ford, Macy's, IBM.

3:26There's one difference now from back then, though. Almost every company ran on credit back then, and credit correlated with the strength and weakness in the American economy, as well as interest rates. But that's no longer the case. Now we have two classes of companies in this country. We have old-school companies that need credit and suddenly find it hard to get, all the while paying more for it if the auctions go sour. And that's the vast majority of S &P 500. And then we have another group of companies. I call them sainted companies, companies that even though they might need credit, definitely don't need to pay the going rate.

3:57You know which beloved companies I'm talking about? Yes, the artificial intelligence companies. They seem to be able to borrow at their leisure. They're crowding out other borrowers with demand for money. And with the sole exception of Oracle, they're considered terrific payers. Nothing we ever have to worry about. For example, we learned this morning of SpaceX trying to borrow$40 billion to buy NVIDIA chips. They'll set them up in data centers, most likely sell the computing power that they create to others who need it. I like they're already doing Google Anthropik very profitably. When it comes to credit willingness, companies are rated by entities that do nothing but great paper.

4:30SpaceX is rated at triple B. Okay, not great. And$40 billion is a huge amount of money. If they're any non-data center-related company, its interest rates cost would skyrocket, and especially for the treasury auctions. But not the data centers. Nope. I bet that SpaceX, more on them later, doesn't have to pay that much over treasuries, as it's called when you borrow close to government rates. Because the future for AI is considered so spectacular by the stock market and by the bond market. Compare that with the bonds just issued by Paramount, now Skydance, the heavily indebted entertainment company that's buying Warner Brothers.

5:03Skydance is totally hostage to the economy. The company issued a similar amount of bonds to what SpaceX is looking for, And even though the rates seemed relatively attractive, around 8%, those who bought the bonds were immediately clubbed.

5:18Their losses were horrific. Why? Because the movie and television business is considered discretionary. You don't have to go to the movies, which, by the way, have gotten pretty darn expensive. And television, just appearing, advertisers are really just court-cutting, and young people who don't even, never even had a cable bill. What is that about? Even though it has a double B rating, only a little worse than SpaceX, no one wanted to touch those bonds. There are two takeaways here. First, there's a gigantic part of the economy, finance, housing, utilities, entertainment, retail, autos, industrials.

5:46It's still totally correlated to credit. Then there are other areas, data centers, semiconductors that make AI possible, power companies and cybersecurity that basically have nothing to do with these credit concerns. Nothing at all. So you can pay less attention to the credit markets and more to their prospects. You know, I don't like to talk about bonds. You don't like it either. They're boring and hard to understand. And we hear about them all day. and it's like, my wife says I snore. Higher rates are bad for the economy. How do you know you snore? You're asleep. Higher rates are bad for the economy, lower rates are good.

6:16But some companies in some sectors have lower rates than you'd expect given their credit rating. AI companies. After I saw the hoopla about this treasury auction, however, it made me reminisce about a time when I read magazines or even watch movies until I saw the results of the U.S. treasury auctions because my head trader would say, go do something, anything, but don't look at the market. It will only tell you the truth after the auction's over with and done with. It was true then, and today I think it's going to be true again, except for the AI-related names. Even though they were down today, believe me, those stocks are saying it, you don't have to wait to hear about the Treasury bond auction to buy them.

6:51Here's the bottom line. The AI data center stocks, maybe aside from Oracle, have nothing to do with what price the federal government borrows at. They only have to do with a future that's considered so bright that it obscures any problems, any bumps, and even any pimples. the rest of corporate America should be so lucky. Let's go to Chuck in Florida. Chuck. Hi, Jim. Thanks for taking my call. My pleasure. What's up? A happy club member. Hey, Western Digital. I've been buying this thing on the way down and I'm seriously underwater on it now and it still keeps going down. But Toshiba throwing the word out there didn't help us.

7:31What do you think? Will it pop or should I get out? Well, OK, Western Digital is up 135 percent for the year. So when you see that, you say to yourself, wow, I mean, like either I missed it or easy money has been made. But the way I look at Western Digital is it's not as good as Micron. Micron is much cheaper. We know Micron really well here. We like it a lot. We think it can go much higher. I'm a swapper of Western Digital, which I did at one point own almost 5 percent of and go on. That's when I was able to own stocks. Now I'm allowed to own a checking account. It looks really good. But Western Digital is not as good as my car.

8:07It's kind of funny. Let's go to Ben in New York. Ben. Hey, Jim, I was hoping to get your opinion on Veritiv. And if you had any concerns about these data center infrastructure. No, no, I think Veritiv is a good company. I think they've got a great order book. I think if you believe in the data center, then I think you have to believe in Veritiv. I think it's a really good company. I'd like to buy it when it's down. And I've got to tell you, it's not even it's not a spec. It's a very good situation, though. And I want to be really clear about this. If you had to buy one other than GE Vernova that handles the whole soup to nuts and it's down a lot, I would buy Virgin.

8:45All right. Listen, AI stocks, the only ones don't have to pay attention to the stock market. So, you know, if you've been to the Treasury auctions, I can't believe we're back doing that again. On Mad Money tonight, Levi Strauss is on the move after just reported. Don't miss my Susan, the CEO. And Constellation Brands reported yesterday, so is it time to get a little more high-spirited about this stock? I'm breaking down the numbers. And Viva Systems is one of the best performers at the S &P 500 last month. I'm finding out what the hype is all about when I sit down with the CEO. So stay with Kramer.

9:21Don'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.

9:45There are three kinds of investors that listen to this show. Those protecting what they've got, those looking for solid returns, and those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash mad. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that.

10:24You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished.

11:01No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required.

11:19What do we make of these just-reported numbers from Levi's Strauss and Company, the iconic denim-focused apparel? This stock had been having a great year until two months ago, when it started selling off along with basically every other consumer discretionary name. Everybody assumed Levi's would be crushed by high gas prices, but not all apparel companies are equal. Tonight, the company reported a technically mixed quarter that I thought was pretty darn positive. Levi's posted a small revenue miss, but some of that was driven by currency fluctuations. You can't control those. Their organic growth was more in line with expectations.

11:49On the other hand, they delivered a large earnings per share beat, but part of that was driven by tariff refunds. While Levi's raised its full year earnings forecast, the boost was a little bit smaller than some expected, but I still thought it was pretty darn good. There's a lot of nuance here, so let's dig deep with Michelle Goss. She's the president and CEO of Levi's Strauss Company. To learn more of his guts, welcome back to Mad Money. Thanks, Jim. Great to be here. All right. So, Michelle, I saw a kind of a different mix from what I'm used to. Your wholesale business, which is a really terrific business, showed great growth.

12:18Your DTC business, not as good growth. What do you make up the disparities here and what can we learn going forward? Yeah, you bet, Jim. So as you were saying earlier, so we did come in at the top end of our guides. We guided four to five organic growth. We came in about five. But the quarter came in a little differently. Wholesale was up six percent. International was really strong. 8%. And I do think that that demonstrates the core of our strategies and the power of this diversified portfolio that we've been building. So the wholesale beat, the international growth did offset some weakness that we saw in DTC, which was up only 2%.

12:57That's isolated to a couple of markets, important markets, Europe, US. We'll get into the details there, Jim, but I will tell you, the team got after the issues, and we're already seeing a rebound. U.S. is positive. Overall, global DTC in September is back up to mid-single-digit growth, and we expect the year to be back up to high single-digit growth. So we're feeling good. This is not about a trend. This is a point in time, and like I said, we've already rebounded. Okay, well, that matters. Did you think there was something off at the beginning with DTC that has since been corrected, and you're back to the strength, if not even better strength, than we expected?

13:35Yes, no, that's right. So it really was specifically in Europe, in the U.S., DTC specifically. So if you take Europe, I think everybody knows it was pretty darn warm this summer. And while we had plenty of, you know, shorts and tanks and tees, it still hurt the business. Our wholesale business in Europe was very strong. So Europe as a region did quite well. They were up mid-single digits at 5%. But in DTC, as the temperatures moderated, as it got cooler, the business rebounded. So it's positive now, quarter to date. We're feeling great. And then in the U.S., it was something different. So, you know, I would say, Jim, that in terms of our campaign, our marketing campaign for back to school, it didn't meet our expectations.

14:22Yeah, I'll tell you a little more about that. I mean, we felt there was a strong campaign and we were featuring some of our top sellers in the loose category because loose has been a big trend, a big macro trend in denim. But for the U.S. consumer, they were actually going lower and low rise. And we do have those products. We just weren't talking about them as loudly as we needed to. So we pivoted. This is all retail. It's about detail and it's about moving. And so when we saw this shift, the team got after it. We have the benefit of the tariff refunds. We are reinvesting. We talk more about that.

14:54But a big chunk of that, we're reinvesting back into the consumer to create demand. So we're increasing our marketing so we can focus on those products that the consumer wants right now, which is low. We have low, loose. We got super low. We got straight low. We got low of any type you want. And that's happening as we speak. And that's been behind the acceleration that we're seeing, as I said, with the U.S. NDTC back to positive quarter to date here in Q4. Well, look, I'd appreciate it because if you had not been transparent, I'd have to say, I don't know what's going on. But the fact that you're both transparent, that it didn't necessarily work well at the beginning and that it's come on strong is great.

15:30One area that everyone's doing terribly and frankly is China. And yet I did not see a terrible number from China. I saw a good one. Why are you able to do well in China? And everybody else is really sputtering. Yeah, we have a lot going for us in China. China was up 13 percent this quarter, and it has been doing well all year. First, I would say we have a great leader. We have a great team, and they are executing. Number two, we've changed the product strategy, and we have more of a focus of, I'll call it our global icons, balanced with product made, tailored to the Chinese consumer. And I'd say in the past, that was a little bit more flip-flop.

16:10So as we brought that more in line, the consumer is responding. We're really focusing on execution in our stores, merchandising the stores differently. And in some cases, we're moving stores. We're getting out of some real estate. We're getting into new high-profile real estate. So like I said, team's doing a great job. And then we had a big winner in China and overall Asia, which is Rosie. We have this phenomenal partnership with this global K-pop star. She's got over 90 million followers globally, but she is incredible in Asia. She's been showing up in these pop-up stores. I mean, we've had thousands of people showing up for these.

16:47Over 3 billion impressions from the media that's been created. And it's been a huge tailwind for us all over Asia, including in China. Right now, I do want to ask about the division that maybe I shouldn't bother to anymore, but it was good, which is your yoga brand, Beyond Yoga. Now, I know it's very small. And you can say, Jim, any second you waste on this is probably a mistake. But I haven't seen anyone who delivered any numbers that were kind of in line or better. And you guys just did it. Is there something afoot? Yeah. Yeah. No. You know, the Beyond Yoga team is making great progress. And as we talk about expanding into more of a lifestyle company, you know, Levi's isn't going to go into activewear.

17:27That's where Beyond Yoga fits. And they delivered another strong quarter. It's a combination of strength in our e-commerce. We are building more stores. I don't know, Jim, if you've been to the pop up in New York, but it's it's doing really well. And importantly, with their category, yes, they're yoga, but there's so much more. And the categories that are really winning are in the lifestyle categories, whether they're travel pants, sweaters, layering pieces, along with some new performance gear called Glow Zone. So team is executing really well. And, you know, it's a smaller business for us, but it's growing handily.

18:01Now, you know, on Wall Street, we take we do a lot of thesis kind of thinking and pattern recognition. We say that when gasoline has gone up, well, we stop buying discretionary. I never know really what discretionary is and whether jeans are discretionary. Are they something that you wear when you don't have as much money? Are you seeing any impact or relating any impact to what the gas pump is doing to apparel? Our consumer continues to prove resilient. Like I said, our issues in the U.S. were DTC and those were our issues. And on the flip side, our U.S. wholesale business was positive in the quarter.

18:37So, you know, even when things get tighter, you just you have to work harder because they're still going to spend. You just have to be that much more relevant, more innovative. And so that's what our teams are doing, are finding ways to really connect with the consumer. You know, in our in our world, too, you know, we're really going after segmentation. So we have our core red tab, classic Levi's, which is also a great value. I mean, quality, durability, I think those things matter even more at times like these. But we've got our signature brand by Levi's Charles. That was up 13%. That's a big business for us.

19:10And a lot of consumers can buy that at Walmart. And they've been doing really well. And then on the high end, we've got blue tab. So now we're getting into products that are$200. small business for us today, but growing double digits. So it's really about meeting the consumer where they want to be met, whether it's, you know, like I said, a blue tab or a signature and our core red tab, but we'll be there for them. All right. Well, I care about what's going to happen in the future. And honestly, what already happened, I think the people who decide, you know what, I don't like what happened in the first two months of DTC.

19:45So look at what happened with the stock, which completely reflected that, but does not reflect the comeback, which is what I care about. Michelle Goss is the president, CEO of Levi Strauss. Michelle, I thank you so much for coming on the show. Thanks so much, Jim. OK, everyone again, I mean, take a look at Constellation Brands. They said things weren't so good and then they said it got better and the stock went up huge. I think the same thing is going to happen here with Levi Strauss and Michelle Goss. May have money back into the break. Coming up, Kramer doesn't think it's last call for Constellation Brands.

20:18He's explaining why investors should feel confident. Next.

20:25This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get wise business. Download the app. T's and C's apply. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that.

21:04You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at go.gle slash workspace with Gemini. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished.

21:41No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required.

22:00Has the long-struggling Constellation brand's STZ finally found its footing? Let's hit this beer and liquor company, best known for popular Mexican imports like Modelo, Corona, the very popular Pacifico, now top 10. And the, well, reported in the market reacted like this was just another discouraging number from Constellation. Sending a stock dramatically lower in after hours trading. I mean, it was getting clobbered before the conference call began. Then something interesting happened. Constellation reversed in pre-market trading this morning and ultimately ended up rallying hard today, finishing up over 2%.

22:35I mean, it wasn't a good day for the market. It's been a long time since this company got the benefit of the doubt after an imperfect earnings report. Constellation peaked at nearly$275 in April of 2024. It's been downhill ever since, including a 38 % decline last year, 14 % decline year to date for 2026. Now, it's just$118 of today's bounce. Now, I've gone over this story before. Like many other booze plays, these guys have been hit by the rise of GOP-1 drugs, which on top of reducing cravings for food also reduces cravings for alcohol. On top of that, the younger generation is more health conscious and 24 states have legalized cannabis for recreation.

23:11Plus, Constellation's customer base leans Hispanic. With the Trump administration's immigration crackdown, that's a demographic that's probably not buying as much beer as they used to. In short, the company's been struggling for a long time, to the point where they brought in a new CEO, Nick Fink, from Fortune Brands Innovations. Now, before Fortune Brands, by the way, Fink was an executive at Beam Suntory. So he did have some alcohol experience. He did very well at Jim Beam before focusing on faucets and Fortune brands. Something definitely needed to change here, but the new leadership hasn't been able to turn the stock around, at least not yet.

23:44The darn thing had just kept sinking lower and lower. It doesn't help that gas prices remain high. The bane of all consumer stocks, especially ones that sell beer at convenience stores adjacent to the bump. Plus, high interest rates make Constellations 3.5 percent dividend yield look a little less enticing, doesn't it? So then what happened? What happened this morning? What happened last night? Look at the numbers. Constellation actually reported a much better than feared quarter.

24:12Their net sales came in higher than expected, up 6 % year over year. They posted 19 cent earnings beat off a$3.55 basis. Really good cash flow. That translates to just a 1 % quote. Not that much. As I dug deeper into the quarter, though, I saw another steady performance from the stalwart beer segment with shipments up 5.5%, much better than expected. Constellation's various brands were mixed, going by depletions, the volume of product moving from wholesalers to retailers. That's the real indicator in this business. Modelo Especial was down 2 percent and Corona Extra was down 5 percent. But that was mostly offset, believe it or not, by Pacifico up 19 percent.

24:49Victoria, really new here, not in Mexico, up 15 percent. And Modelo Cholada Limon Esau up 5 percent. Management said the beer business took the most market share this quarter, whether we're talking about terms of dollars or volume. Modelo Especial remains the number one beer brand in America by dollar sales. Pacifico and Victoria are both taking share aggressively. As I mentioned, overall, the beer business looks good. And surprisingly, Constellation's much smaller wine and spirits division was even better. Now, when I spoke to Nick Fink back in August, I was shocked, shocked to hear that he was so positive on that part of the business.

25:24It's been terrible. But now I see why. Wine and Spirit shipments were up 15.4 percent. And also, they were expecting a 0.4 percent decline. Net sales grew 17 percent year over year, a huge beat. They even put up a small operating profit. Constellation called out two brands in particular for this newfound strength. Kim Crawford Wine, which had 11 percent depletion's growth. And this is the big one. Mekompo Tequila. This is up 51 percent. Turns out they're doing much better than the average wine and spirits company. Tequila, by the way, is the lone bright spot in hard liquor. Agave Spirits Constellation is cashing in.

26:03At the same time, Constellation announced a new acquisition. They're paying$75 million up front and as much as$278 million in contingent consideration over the next five years to acquire spiked aid. It's a bit like Gatorade and spiked aid, which makes sports drinks spike with vodka. Now, this is apparently one of the fastest growing areas in the industry. Some of the younger members of the mad money team tell me that spike data is pretty good. So maybe, I don't know, you work out and you take it. I don't know. I got to learn about this thing. And look, even if Constellation is just chasing a trend here, they don't have to pay very much if spike data fails to hit its milestones.

26:39And ready to drink drinks right now are the hottest thing in the entire industry. So why did the stocks sell off so hard in response then? At one point this morning, just before the conference call started, Constellation was down 1 to 7 percent. Simple. Even though the results were better than expected, management didn't raise, did not raise any part of the full year forecast. When you beat numbers but leave your guidance untouched, Wall Street does the math and assumes that the rest of the year is going to be weaker than expected. Constellation is now two quarters into their 2027 fiscal year, and a lot of people assume that management lacked confidence in the following two quarters.

27:12That's why they didn't raise. But then the conference call starts at 8 a.m. this morning. And right off the bat, at the very beginning, CEO Fink said a few words that changed everything. Listen to this. Quote, first, we are reiterating our fiscal 2027 guidance. And if the positive September trends that we saw continue, we would expect to land at the high end of the range. He went on to add the Constellation's marketing investments are working and its inventory levels look very healthy after the company spent much of the last six months rebuilding distributed inventory levels. Bingo. That's all that was needed.

27:49While Constellation isn't formally raising its guidance, they did have a good September. And assuming no slowdown from here, they expect to land at the high end of their forecast for the year. They left the numbers unchanged, but informally raised the low end of the guidance. With that worry taken off the table, the stock started rebounding like crazy. So now we've got to ask, despite this back and forth, is the worst behind Constellation Brands? I think it's far too soon to say something definitive because this is a liquor business. But this was the best overall quarterly update that I've gotten from Constellation in quite a long time.

28:23With the stock still trading just over 10 times this year's earnings estimates day for today, I don't blame anyone for feeling tempted to buy, although I wouldn't go that far myself. The secular headwinds for the beer and liquor industry are real, but they're also well understood at this point. And they didn't stop Constellation from putting up a strong quarter. even if the company got a boost from the World Cup and also the Knicks championship run. Here's the bottom line. For me, the most encouraging part of this story is the Constellation brand stock initially sold off like crazy in after hours trading before rebounding and finishing today well into the black.

28:56While I'm not ready to start pounding the table on Constellation again, let's just say this. I feel much better about this stock than I did 24 hours ago. Cordell in Ohio. Cordell. Hey, good evening, Jim. What are you doing, man? What's going on? How you doing? I'm calling in on a company that's trading around a level that it did in February of 2021. I was just wondering, is CMG going to reach lower lows before it reach higher highs? You know what? CMG, I still think Scott Boatwright's getting it right. But you know what? The restaurant group is going to help help just so out of favor. It's incredible.

29:41Now, some of that is because of gasoline and inflation. Some of that is because of belief that anything that costs more than fifteen dollars for dinner is too expensive in this country. And it's not just Chipotle is being hit by that. Me, I think this too shall pass. But I know I'm lone. Probably very one of the few people who thinks that thirty dollars is a good level to buy CMG. All right, listen to me. I'm not yet ready to pound the table. Do we have any of that spiked eggs? I'm going to work out tonight. And I think you take it during the workout. What do you do? Constellation Brands, I sure feel better about it today than I did before it reported.

30:14Hey, by the way, much more mad money, including my excuse for one of the hottest stocks in the S &P right now, Viva Systems. Then Goldman just raised his price target on a certain stock by$10. I'm explaining why that$10 means everything to this name. And of course, order calls rapid fire tonight's edition of the lightning round. So stay with Kramer.

30:41After a brutal beatdown over the past couple of years, the cloud software stocks came roaring back this summer. This whole group had been weighed down by worries that AI would let their customers basically write their own software, and the selling was totally indiscriminate. Take Viva Systems, the best of its business. Make software for the farm and biotech industries. Their platform helps capture the whole clinical trial process where mistakes have really serious consequences. So this was never going to be an easy business to disrupt. They reported a truly great quarter at the end of August, which sent the stock up 15 % single session.

31:12It's now been able to rally nearly 50 % over the last three months, one of the best performers in the entire market. Not only were the results phenomenal, Viva's even competing against Salesforce for a piece of the pharma customer relationship management. basically sales rep software, recently won some business from Eli Lilly, Amgen, Biogen, Regeneron, a bit of a dogfight. They're also using AI themselves to handle repetitive tasks for their customers. So can the stock keep running? Let's check in with Peter Gaster. He's the founder and CEO of Viva Systems to find out. Mr. Gaster, welcome back to Bad Money.

31:40Jim, thanks for having me, and great to see you. All right, so Peter, I think you're the textbook here. There are people who come up with theories, and one of the theories was, you know what, they're going to vibe code, they'll be, the drug companies will be able to, Deep Viva. There wasn't an ounce of truth about it, Peter, not one ounce. How does this happen? I've known you for 15 years. There's not one ounce of truth about it. Well, you know, people get spun up on things, Jim, and they believe the dream, Saspocalypse or whatever. It never made any sense to me. And I'll tell you why. These are critical industry specific applications you use to run your clinical trials to manufacture medicines.

32:21You're not going to do that with Claude or Gemini. So it never made any sense to me. So we just kept heads down executing and let all that noise go by the wayside. Now, in reality, of course, not only can you not do it that way, but the fact is, if you do it wrong, you could end or blow billions of dollars of your drug company, correct? Yeah. I mean, this is a serious thing. Yes, Money is on the line. But also, these are patients, Jim. You know, a clinical trial is a serious thing. It can be a life or death thing. Medicine that is injected into your veins. Right. This is serious stuff. So, yeah, it's like flying an airplane.

33:01You don't you don't mess around with it. And our customers know that. Right. They need reliable things because it's about the patient. And how about confidentiality? I just going to put it out there or if I use Viva, I have a pretty good sense that my data won't be discovered. Oh, absolutely. Right. These are, you know, recipes for unpatented medicines. Right. This is highly confidential stuff. So that's why, Jim, I never really thought this Sastocles thing. Maybe it applied to some people. It certainly didn't apply to Viva. Now, how about Falcon and getting work done? Viva's Falcon AI agents.

33:33I've not talked to you since this product has come out. Yeah, super exciting. You know, so what we're building, Jim, is the industry cloud for life sciences. So as you mentioned, we have big pharmaceutical customers, Lilly, Pfizer, Amgen, etc., but also small biotechs, very nimble. We make these cloud applications for them. We make data. We do consulting to change our business processes across from manufacturing to clinical, but also AI solutions. It's what we call industry-specific AI solutions or industry AI. And that's what I'm most excited about because, you know, I've been in tech since the mainframe gym.

34:11I've been around for a while. And this AI hardware and software, it's the biggest tech disruption we've ever seen. And yes, there can be issues in the world. And you know what Bill Gates says, et cetera. I get that. And I am in sync with that. But what we can do is use it for the good of our customers and do tremendous things. And you're right. Now we have Falcon. We had Viva Vault applications. Now we have Falcon agents that can do some of the repetitive work in life sciences so that people can do different work and not that repetitive work. I'm starting to see some of the diagnostics companies that have just been horrendous.

34:49Their stocks are going up. Some of the smaller biotechs are coming up. Is it possible that we are finally seeing some magic from AI in the lab? Well, I think, Jim, what's happening is people coming back and realizing, oh, this life sciences sector is a good sector. Why? Because patients need it. And the other reason, the actual core biology is accelerating. So you're going to have more medicines curing more diseases. And on the other side, the patient's able to educate themselves more with AI. So they're going to be able to find that medicine. So I think it's people are realizing medicine is going to do more good in the world, better medicine that finds more patients.

35:33Therefore, the value will accumulate to these companies. I think they just lost sight of that macro trend for a while. Now, I've one of the things while people are telling me that your business was dead because I could go vibe code it. You're talking about a road to six billion dollars. Now, that would be an incredible run rate and would make your stock even after this big run be very undervalued. yeah well you know stock valuation that's really your business we're focused on the execution i can tell you what i'm excited about the success our customers are having and the innovation and bringing ai to our cloud that's how we can get there and jim you know six billion dollars revenue yes that's our goal and yes we're on track but i view that as look how much value viva can bring to the patients and the world and the life sciences industry because six billion dollars If we're getting that revenue, Jim, I want to include I want to produce at least double that value for the world.

36:25Wow, that would be incredible. And one last thing. Can the smaller about the companies afford you? Can they go to Viva and say, listen, you know, we don't have that much money, but we got something. Absolutely, Jim. And I'm going to tell you something about what we call Viva Basics. We started three years ago. We have almost 200 customers on Viva Basics. It's super affordable. And here's the thing, Jim, it's an outstanding innovation. They use our product, but they also use our processes. They don't have to configure a thing. So they get going right away. That's very efficient. It can help them defer their hiring.

37:00It also makes them a much easier acquisition target. Because as you know, if a biotech has a very innovative venison, they either can get bought and get put into a bigger company to reach more patients, or they have to scale up their own operations. So Viva Basics has been just a wonderful thing for the biotech industry. All right, that's terrific and great to know because there are a lot of companies in that position, and they have to be able to bring something to market or exactly what you said, or they actually could run out of money. We certainly don't want that to happen. That's Peter Gaster, the founder and CEO of Viva Systems.

37:30What an amazing comeback of the stock. But the business was always great. Thank you, Peter. Thank you, Jim. May I be back after the break? Coming up, he's the fastest mind on Wall Street. So we're putting him to the test with your help. Bring on the lightning round next.

37:57It is time. It's time for the lightning round.

38:03And then the lightning round is over. Are you ready? Ski day. I'm away from Craig in Missouri. Craig. Hi, Jim. My question is over a stock that just went public in March. It's currently being divested from its parent company, Minimet. Oh, Medtronic got rid of it, and I don't want anything to do with it. I do like Medtronic, but I do not like Minimet. I didn't even like it in the old days. Let's go to Harvey in New York. Harvey. Hey, Jim. I'm first-time, long-time listener. My mother as well. Mind you, she passed. Anyway, we have a question about RMDS. Hold, a sell, or a buy? Yeah, it's never really intrigued me.

38:55There's no real catalyst. It just kind of sits there. I see no reason to buy it. Let's go to John in Florida, please. John. Booyah, Jim. Booyah, John. What's going on? Hey, man, I'm a long-time listener. I'm a long-time club member. I'm leaving a little bit crazy. I'm leaving a little bit crazy because I'm looking at an industry that's in fair market territory, that stocks at a 52-week low, but they just got a new CEO, and they got themselves a$6 billion contract for the federal government. Am I crazy to want to start a position in L3 Harris? You're completely back. No, actually, I kind of like L3 Harris, to tell you the truth.

39:37I've actually been looking at it, and I've been saying this. it just isn't that bad. I mean, it sells it like 10 times or 8. Well, no, it's got a discount to the S &P multiple, but it just shouldn't be going down and down and down. Where do you pick a bottom? I don't know. We talk about this a lot at the club. How do you pick a bottom in a stock like L3 Harris? You don't. You say you want to buy 100 shares by 25 here, and then you use three five-point increments to be able to get it. It's$230 stock. Divide it by 10. Look at it like a$23 stock. Buy your first at 23, and then you buy it down to 20, and I think you're going to find you got a bottom and a really good basis.

40:12There's an analysis for you. But he said he was crazy. I gave him a crazy analysis. Let's go to Steve in Florida. Steve. Hey, Jim. I'm talking about a small cap company. How are you tonight, anyway? Oh, thank you for asking. I'm fine. How are you? Great, thanks. Hey, I'm talking about a small cap company, Giga Cloud Tech, symbol GCT. I actually met these guys. I mean, I got to tell you, this thing is such a rocket ship. This is one of the most speculative stocks on earth. If you want speculation, I say gigacloud. Let's go right now to Max in Ohio. Max. Hi, Jim. Thank you for taking my call. My question is about acceleration, ACZV.

40:53Is it good for the long term? If I heard of it, I could answer the question, but it's the first time for me. Acceleration, huh? It's kind of like acceleration, excavation. I don't know. Let me do some work. I'm looking at Ben Stutter right now. He's going to be tasked with acceleration. I like the name, but I guess that's not enough. Let's go to Carl. Look, for a lot of people on TV, it's enough. It's not enough for me. Let's go to Carl in Indiana. Carl. Hi, Mr. Kramer. Good evening. Good evening, Carl. What's going on? Well, I have some extra money in my Roth after taking some profit in NVIDIA.

41:34Don't worry, I have a lot left. I'd like to find something that is not dependent on AI. And the stock I'm looking at has a 14.25 forward PE, which is high for their group, but a 5 % down right now. It has a dividend. But can it grow? My stock is Archer Daniels, ADM. Okay, Archer Daniels has kind of done nothing for a very long time. And until now, and I actually think it's a terrific idea for you. I also like John Deere. I like the ag business, not just because it's a midterm election. I think Arthur Daniels' time has come. And boy, believe me, those who know me in the 80s and 90s and 100s, when I used to say, when is it going to happen?

42:21I think the future is now. OK, let's go to Anthony in Florida. Anthony. Jim, thank you very much for taking my call. I've been watching B.W. Babcock, and I'm looking at the industry. I'm looking at the company, the management, their backlog. And I'm willing to invest a year to a year and a half. Am I making a mistake by buying it here? No, no. I mean, you didn't catch the bubble. It's all the way down. It's a pretty good spec of five bucks. Don't put too much money into it. But I think it's a nice speculation. And that, ladies and gentlemen, conclusion of the lightning round. The lightning round is sponsored by Charles Schwab.

43:10Coming up, Kramer's analyzing why SpaceX's price targets keep taking off and why you should believe them. Next.

43:28Sometimes price targets seem like a total waste of time. I mean, they get raised when stocks go higher, cut when your stocks go lower. You don't see many research channels and portfolio managers actually go against the grain. That, by the way, includes me from my travel trust, whereas club members know we present price targets too. So therefore, are these price targets worth anything at all? Overall, actually, yes. When you see a stock go down after it reports, but analysts raise their price targets en masse, that's a sign that the stock probably shouldn't be going down at all. Many commentators take their cue from what I call the action.

44:00They see the stock down after reports and presume something must be wrong with the quarter. Because why else is it getting slammed? But the market and its commentators get things wrong all of the time. Stocks often sell off on good numbers, especially if they're already up big when they shouldn't even be down. See, that's called profit taking. In fact, when I'm looking for an entry point in a stock I like, I always measure the disparity between analyst coverage and that stock's performance. Let's say if there are 10 analysts who cover a company and all 10 raise their price targets after a quarter, even as the stock's going lower, then I want to bet that the analysts were going to be right.

44:35And I, for the most part, I don't pay much attention to the intra-quarter, unrelated to earnings price target changes. But periodically something happens that just stuns me into realizing maybe there's something big afoot. Yesterday, for example, Goldman Sachs put out this really incredibly thoughtful piece about SpaceX, Elon Musk. Now, I've been adamant this is a real company with real numbers and a real business, many businesses even. I defended it against endless snipes about how it's overvalued because I have confidence in Elon Musk's leadership. And he's made some very smart moves, like renting out the company's excess computing power that he got by buying NVIDIA chips for what I regard as almost extortion in prices.

45:14For the most part, it doesn't matter. SpaceX is, by most pros, considered a retail stock, and they say that with contempt, meaning a stock that only unsophisticated investors would ever own. Most of the punters consider it ridiculously expensive, overvalued, even with huge revenue now coming in from Anthropic and Google thanks to those compute deals. Of all the data in the Goldman Sachs SpaceX piece, here's the line that really jumped out at me. Quote, we reiterate our buy rating and raise our 12 month price target from$220 to$230 for SpaceX shares. End quote. I know. What can you really learn from that?

45:53Simple. That bump, that$10 bump from$220 to$230, that ratified the initial previous$220 figure, which means something with the stock at$167 changed and a lot when it was down there at$140. They got it. What do I mean by ratified? Okay, when Goldman Sachs and a bunch of other firms first rode on this company, they were full of superlative, but short of numbers. It seemed like everyone was just making them up, frankly. SpaceX stock was at$120. That$220 price target seemed almost silly. I mean, who even knows where they got that number? But when I saw the latest price target boost, I said to myself, wait a second, maybe there really is some rigor to the analysis.

46:30When you're dealing with real speculative games, you almost never see price target bumps until after the hot money's overrun the price target. By then, it's too late anyway. With SpaceX, though, these Goldman analysts looked at all the incredible things happening right now and decided to get ahead of the move. And hey, I get it. They're making so much money renting out computed SpaceX that the company's planning to borrow$40 billion to buy more chips for NVIDIA. As I said at the top of the show, they can scale up the business. Why not? Musk can immediately monetize these chips. SpaceX could end up being NVIDIA's largest client at this pace.

47:00That's fantastic news for both sides. As I've said before, I don't think that this one's right for the Chapel Trust. But you know what, club members? I think you should stay tuned because it's becoming more and more likely that SpaceX could come to fruition a lot earlier than Tesla ever did. taking price target up space exploration technologies. Get used to hearing just that. And CBC Investing Club members, maybe get ready for me to buy it for the Chapel Trust at next week's monthly meeting. Now there's a tease. I'd like to say there's always more, because some of my problems are fine. Just for your money, I'm Jim Cramer.

47:31See you tomorrow. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Cramer on television, radio, internet, or another medium. 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 and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

48:01To view the full Mad Money Disclaimer, please visit cnbc.com forward slash madmoneydisclaimer. The Corpay MasterCard isn't just a card. It's a smarter way to manage business spending. From driver expenses and travel costs to accounts payable, CorPay brings more of what you spend into one connected program. That means fewer disconnected systems, less manual work, and greater visibility across your business. Instead of chasing down transactions or sorting through spreadsheets, your team can focus on bigger priorities. One card and one program. Visit CorPay.com to learn how CorPay can simplify the way your business spends.