Mad Money 07/21/26 | Audio Only

My mission is simple: to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now.

Hey, I'm Jim Cramer. Welcome to Mad Money. Welcome to CNBC America. Other people make friends. I'm just trying to make a little bit of money here. My job is not just to entertain, but to teach you. So call me at 1-800-743-CBC. Tweet me at Jim Cramer.

Holy cow, people. I am not anti-tech. I am not a Luddite. I like data centers so much I wish I lived in one. And I did sleep next to a nuclear power plant during the rather ignominious time I lived out of my car. No police officer has ever roused someone sleeping in a 1978 Ford Fairmont in the parking lot next to some long-shuttered Sacramento nuclear facility. Yet on a day like today, where the Dow gained 385 points, that's climbed 89%, but the Nasdaq jumped 1.29%.

People are talking about being like I'm running around here with my hair on fire trying to get you out the biggest winners of all time: the memory stocks, the DRAMs, and the glorious high-bandwidth plays like Micron and SK Hynix. That's my nickname for SK Hynix because this monster from Korea that now trades here has hijacked our trading and often determines how our chip stocks are going to end up. Yes, the addition of that stock in the Nasdaq 100, which should happen soon, plus the inclusion of SpaceX, has added a ton of volatility, something I don't think you truly appreciate. Oh, and I wish I had some hair to catch on fire. But that's old news.

Some of you have complained to me that I've kept you out of SanDisk, which is up 570% year to date. Micron up 240%, Seagate up 224%, Dell up 221%, and Western Digital up 218%. I don't know how that's possible. I've liked Micron for ages, and if you ask Michael Dell, who's the most positive person in the media toward his amazing company, I bet he'd say Jim Cramer. So I'm not anti-tech, but I do like diversification. We've had some sickening days of late where all these stocks that I just mentioned got clobbered.

I started this show in 2005, determined to keep people in the market and not get blown out. Many of you forget that a whole generation of investors was wiped out by betting on the internet. Another whole cohort was destroyed, just destroyed, by the Great Recession because they owned too many stocks that were connected to finance. They just didn't know it. These two events are the reasons why we all defaulted to index funds, going for average because average was per se diversified.

Now, I run an investing club and I wrote a book called "How to Make Money in Any Market." Both stand for picking some individual stocks, but only after you build up a comfortable position in S&P 500 index funds. Most of the so-called smartest investors have spent no time studying what happens to your portfolio if you buy an index fund and marry it with some of the greatest stocks of all time. They hate it when you buy individual stocks. They want your money so that they can pick them for you. I hate their disdain for your stock-picking abilities. It is condescending. It is petty and it is arrogant. But I do want you to know all the risks included in concentration risk, which is one of my biggest worries when it comes to this group.

In the end, I like tech, but I like it in a lot of different places. If you think Johnson & Johnson is about Band-Aids, you don't know the company. They sold that business. J&J is a company with an AAA balance sheet that invents new life-saving drugs practically every month. Later in this show, you're going to hear from 3M's Bill Brown. His company, which used to be a tremendous innovator, is now back like the old 3M with scores of new products in all sorts of industries, including data centers. It could have a multi-bagger move using its industrial scientific savvy.

Hey, how about CVS, the only real drugstore left in this country that also provides health insurance through Aetna? Win two different ways. Or have you considered the tech that goes into running a bank like Goldman Sachs or Wells Fargo or BNY, and how you're buying these stocks at valuations that are radically lower than almost all of tech? Robin Wight, CEO and chairman of BNY, whom I just introduced you to last week, he just joined this evening the board of OpenAI and the OpenAI Foundation. Bank tech meets AI tech. Happy.

It just doesn't make sense to me why you can't diversify into these other stocks and sectors and make money. Something we've done with my charitable trust, where we've given out almost $5 million in gains by being diversified through thick and thin for more than two decades. I don't want you getting blown out because you own nothing but semis and the group has a bad day. I fear you will take your licks and move on to another form of investing like cash, especially those of you on margin. I certainly don't rebel at owning tech. Hey, my Travel Trust's largest positions are Apple and Nvidia, for heaven's sake.

Sure, these haven't kept up with SanDisk or Western Digital lately, but they are unique, excellent companies that are making fortunes. Apple stock has advanced. Nvidia stock is stuck for the moment. Some of that's because it doesn't sell enough in China. I think it's because Nvidia's clients are so anxious to both praise it and work against it. And the media loves to report it whenever a customer tries to design their own chips away from Nvidia. But it's really cheap, and arguably Nvidia, I think it's the best-run company in the world.

Like I always say, you should own Apple and Nvidia, not trade them. I think Apple's brand will allow it to pass the higher cost of memory on to telco carriers while they also get the benefit of Alphabet's AI spending. Nvidia, my position on this one's become controversial. I wanted Nvidia to be the chip of choice for China so that the Chinese would write on our tech. That was a controversial position. It wouldn't be used by the Chinese military because they don't want to be dependent on an American chipmaker anyway.

But once Nvidia started to run against a brick wall in China, I didn't want more American companies to give away trade secrets to the Chinese in order to be able to get cheaper AI. Hey, why don't you go look at the case Micron brought in 2017 against a Chinese entity that stole so much Micron intellectual property that the case became a criminal investigation by the Justice Department, one that the Chinese company pled guilty to. I'm not making this stuff up.

I respect Nvidia so much and won't listen to reason, but not if national security is at stake by allowing China to have secret access to so much data from so many of our different companies. I don't think that's smart. So here's my advice: if you want to go own a memory chip maker, I like Micron. If you want GPUs, to me that's AMD or Nvidia. If you want CPUs, that's Intel. Racks, call Dell. Optics, Coherent. Make it corny. We always forget that when you get a big pop in semis, that's a good time to reposition.

But I need you to recognize that as much as I like Micron or Nvidia or Apple, consider how you're doing in software. Say, right now, not that well. Also consider if you bought Micron at 1,200 at its high, now it's at 970. How about Western Digital? 799, it's 548. When you look at it like that, these stocks are down so much that if you bought them on borrowed money, well, you're not watching the show. You're gone. I don't know what you're looking at. I don't know, maybe the... I don't know what you're looking at. That's up to you, okay? So be aware that if you're someone who has worked in margin...

That's right. Worked in margin at Goldman Sachs. Do you know I've taken someone's keys after a big blow in technology? Send me what you have. They give me the keys. As a hedge fund manager, I moved into a tech brokerage house office after it was cleaned out because it couldn't meet its margin requirements. I've seen so many people never ever come back here because of the 330 dots that got blown out in 2000. So, I mean, what do you think? I know where my ankle... I just had here. But this is... I'm trying to get better. I got a big wedding this weekend with my son, my stepson. Just trying to do a good job. You know, what can you do?

Anyway, the bottom line: every one of the people who were in these margin situations, do you know that they were rich and brilliant before they became poor and stupid? That's where I'm coming from. And not only do I not apologize for my stance, I know I'll lose you as a viewer and a club member sometime in the next year if I don't make you take the need for diversification more seriously.

That's the right one. Randy in Michigan. Randy.

Yeah, Axon Enterprise. People have turned against defense because they think the budget's going to be a real problem for them. I'm not going to disagree with that. I've been looking at all these defense stocks. They're not... they don't seem to be coming back as long as they're spending so much money in Iran, or at least trying to take out Iran. That's what the plan is. Let's go to Timothy in North Carolina. Timothy.

I've been... I've been flummoxed by FedEx. It was down six yesterday, it's up nine today. I think that Raj Subramaniam is killing it. I think that you want to own FedEx into the holiday season. FedEx Freight, I think the spin-off is terrific. I kept them both for the Travel Trust. I usually get rid of one. I did not do that. I think FedEx Freight has a great advantage. They're going to be able to take out costs and be much more focused. So there you are.

Tech, I don't know. I don't... tech, I don't know. All right. Diversification is always important, but I'm pounding the table on it right now. Especially, I can't believe I have to defend myself for diversification after all we've been through on Mad Money tonight. Kimberly Clark's buying Kenvue. So, how does this position the CPG company for more success? I'm taking a look at the steady-Eddie dividend payer and giving you my take. You probably hate it because it's steady and pays a dividend.

Anyway, the credit card companies have been holding up well lately, but what does that hold for the future? I'm going off the charts. And 3M just reported a fabulous quarter that sent the stock up nicely. I'm sitting down with the company's bankable CEO to find out more about the quarter and the path going forward. So, I want you to stay with the diversified Cramer.

Even though the last couple of days have been terrific for most of the AI data center stocks, they're bouncing after a multi-week beatdown that may be more cautious on the entire group. I urge you to be a little more selective. Like I told you last night, you might want to use this moment, the bounce, to trim some of your tech holdings and start diversifying into sectors that are less volatile, as we've been doing for the Travel Trust, which you can follow along by joining the CNBC Investing Club.

Which brings me to the stock of Kimberly Clark, the personal care company you know as Huggies diapers, Kleenex, and a bunch of other paper products. Like many consumer packaged goods stocks, this one's finally found its footing after struggling for years. Best of all, Kimberly Clark realized it needs to consolidate, which is why it's acquiring Kenvue, J&J's old consumer health business. I want you to think there: Tylenol, Neutrogena, Listerine, Band-Aids. These are everyday necessities that consumers buy regardless of the state of the economy or the price of gasoline.

Doesn't hurt that Kimberly Clark will pay you handsomely while you wait for the deal to close. The company raised its quarterly dividend to $1.28 per share earlier this year, giving it a 4.74% yield at these levels. This is not just a dividend aristocrat with 54 consecutive years of dividend increases. This is a dividend king.

Unfortunately, the stock itself has been going nowhere for ages. Kimberly Clark's down 20% over the past five years, 15% over the past 12 months. It's had a better start in 2026, up over 7% year to date. But it's still trading near its cheapest valuation in a decade, aside from the lows from earlier this year, at 14 times this year's earnings. Thank heaven, something cheap. I think this is a steal given all the cost-cutting opportunities ahead from the Kenvue deal.

Especially when you consider that you're not going to see Chinese tissues in your bathroom or Chinese diapers on your babies. Last November, Kimberly Clark agreed to buy Kenvue for $48.7 billion in cash and stock. More than 80% of that, though, is in stock. When this transaction closes, existing Kimberly Clark shareholders are expected to own 54% of the combined company, while existing Kenvue shareholders will own 46%. They're paying with stock in part because they don't want to blow up the balance sheet.

The deal seems likely to close in the second half of the year with Kimberly Clark CEO Mike Hsu, my favorite consumer products group honcho, staying on as chairman and CEO of the combined enterprise. That enterprise will own $10 billion brands and sell products that touch nearly half of the world's population. The strategic fit makes so much sense. The strengths of the two companies are complementary.

Kimberly Clark has spent years improving its commercial execution, its manufacturing network, its digital marketing, and relationships with major retailers, while Kenvue brings stronger scientific capabilities and relationships with healthcare professionals, including pediatricians, dermatologists, and dentists. Kenvue has terrific brands, but the company has struggled to generate consistent growth since being spun off from J&J. Kimberly Clark believes it can apply its commercial playbook to those brands and get them growing again. Mike Hsu said that the closer he looks at Kenvue, the better the opportunity gets. I agree with him.

Then there's the geographic opportunity. This is one of the things that excites me most about it. Kimberly Clark believes it can accelerate Kenvue's brands in China, Mexico, South Korea, and Indonesia. Kenvue can help expand Kimberly Clark's categories in India and Western Europe. Hand in glove. The companies are targeting about $2 billion in total run-rate synergies. That includes $1.9 billion in cost savings and $500 million of incremental profit from revenue opportunities, offset by $300 million that will be reinvested in the business.

Management expects to capture the cost savings within three years of closing and the revenue benefits within four years. They say the deal will be additive to earnings within the second year. Okay, good enough to me. Sure, I would like it to be the first year. You can't have everything. Of course, this is a massive integration, and large consumer mergers rarely go according to plan. To achieve these savings, Kimberly Clark and Kenvue plan to spend $2.5 billion during the first two years post-closing.

But Kimberly Clark has earned some credibility on efficiency. The company's delivered productivity savings of around 6% annually for many years in a row, including in the last quarter. It's already more than halfway through a five-year, $3 billion productivity enhancement program that was launched in 2024. And look, the base Kimberly Clark business was already doing just fine. In the first quarter reported in late April, they delivered a healthy top and bottom line beat fueled by solid volume growth.

Kimberly Clark has been improving both its premium and value products. Households have gotten more selective, especially in North America, and Kimberly Clark feels the need to offer something compelling at every price point to fend off private label competition. Now, Kimberly Clark reports second quarter earnings in two weeks, on August 4th. I'm not expecting a blowout quarter. The Street's looking for $2.10 earnings per share and $4.23 billion in revenue.

The quarter also faces the tough comparisons of the year after North American volumes grew more than 5% in the year-ago period. There's also this distribution center fire in LA, something that's weighed on the business in the second quarter. Big paper products fire. But management expects shipments to accelerate in the second half as the company ramps new products, moves beyond the fire-related impact, and faces easier year-over-year comparisons. In other words, maybe not a great quarter ahead, but maybe better quarters after.

Of course, there are legitimate risks here. I need you to know these. The Kenvue transaction is enormous. Existing Kimberly Clark shareholders will own only 54% of the combined business, so we're talking some serious dilution. The company will take on additional debt and plans to limit share repurchases until its leverage ratio gets back down to around two. Sensible, but probably will not help the stock.

Kenvue's brands are fantastic, but fantastic brands do not necessarily guarantee fantastic execution. Kimberly Clark needs to integrate two large global organizations, combine systems and supply chains, avoid distracting the core businesses, and deliver billions of dollars in savings. The Kenvue portfolio also brings additional regulatory risk that didn't exist for tissues and toilet paper, including ownership of the Tylenol brand, something that wasn't controversial until RFK Jr., HHS Secretary, drew an unproven link between Tylenol and autism, a claim that Kenvue has refuted.

But that's why the stock trades at a big discount to the S&P 500. So, let me give you the bottom line, and this is not a runaway situation. And this is one of those things I'm trying to show you that you can add while you take a little bit of tech out of your portfolio. I'm looking for stocks with good potential upside that will also let you sleep at night.

Kimberly Clark is a defensive business with a 4.7% yield and a cheap stock that is protected from a lot of foreign competition. Plus, the Kenvue acquisition gives it an incredible path towards faster growth, higher margins, and a much broader health and wellness platform. I'm not expecting the second quarter report to be the catalyst here, but I think it's a great long-term opportunity. In fact, I actually hope it sells off on the quarter, which it very well will, letting you buy some on weakness. Your whole portfolio cannot be in memory chips. Mad Money's back after the break.

For months, we've been hearing endless hand-wringing about the state of the consumer, something that's only gotten worse since the regional war with Iran sent the price of oil back into the 80s. But this market isn't always as obvious as you'd expect. And the consumer is surprisingly resilient, which is confounding a lot of these economists. Just last week, we got some solid retail sales numbers for June. Retail sales were up 6.7% year-over-year last month. That's extraordinary.

The National Retail Federation is projecting that they'll grow at a 4.4 clip for the full year. I think it's actually too low. And consumer spend, you know what? How do they do it? They use credit cards. They represent 35% of consumer transactions, far and away the most frequently used single payment method. About 81% of Americans have a credit card, usually three or four. On average, consumers tend to use up about 29 to 30% of their available balance.

The median household has a cash balance of about $8,000, but many consumers would rather use credit for purchases than draw down their cash and savings. All this is to say that the three big credit card companies, Visa, Mastercard, and American Express, have a tremendous read on the state of the economy. And after a very rocky first quarter, these stocks have been steadily chugging higher since April.

And that's why tonight we have the privilege of going off the charts with the help of Bob Lang, old friend, founder of ExplosiveOptions.net and the author of "Know Your Options," to take a closer look at the major credit card companies and what their stocks look like and what they're telling us. Why don't we start with Visa? That's the most used credit card. 60% of cardholders have one. I've got one. I don't know if you do.

Check out the daily chart. Visa's been roaring higher on terrific relative strength lately. I mean, this is not what Visa's chart looks like when the consumer is being squeezed. When you look at the moving average convergence divergence, that's the MACD, and it's right here, which is... that's an important momentum indicator that can detect changes in the stock's trajectory before they happen. Not, you know, look, this isn't a coincidence thing. This is predictive. It made a bullish crossover in mid-June. That's what really got people excited. Okay, right there.

But that's when the black line crosses over the red line, and it's one of the most positively reliable patterns there is out there. Sure enough, the stock's been on fire ever since the cross, and you can see how on fire it's been. Now, I want you to look at the on-balance volume line down at the bottom. Okay, this is really important because a lot of people don't bother to look at this. This is a volume-based technical indicator that adds volume on up days and subtracts volume on down days to gauge buying and selling pressure. It can help spot trend reversals.

Lately, Visa's on-balance volume has been spiking, and that's a strong sign that big institutions can't get enough of this one. This is rather extraordinary, how much they love it. Meanwhile, the stock's in a solid uptrend, having made a series of higher highs and higher lows. Again, textbook bullish. Last quarter, Visa rolled out a $20 billion buyback. Lang thinks there's a chance they might add more to the repurchase plan when they report again next week.

In his view, a good quarter should push this $355 stock to 400 by the fall, even as it's currently within spitting distance of an all-time high. Now, remember, unlike American Express, Visa and Mastercard have no credit exposure. They don't have losses if you don't pay. And that's why they're so loved by mutual funds.

Now, let's take... I want to talk about the next chart, which is one of my absolute favorites. Michael Miebach runs it. It's Mastercard. MA, second most commonly used credit card. 25 to 30% of cardholders have one. Again, you can see that the stock's going crazy in the last few weeks, bouncing like mad off its June low.

Although, unlike Visa, it still hasn't taken out its January highs. This is what I mean, by the way, when I say you need to diversify away from some of your tech. Mastercard is a tech company in bank clothing. It's always been a terrific place to be. Lang notes that Mastercard has made a bullish trend channel of higher highs and higher lows. The MACD line that I told you about threw off a buy signal last month. Let's go to that. Here we have the buy signal where the black crosses red. Okay, the same bullish crossover as we saw with Visa. The relative strength index, another key momentum indicator, has been...

Trending steadily higher. Put this at the top this time. We like that, but it hasn't quite reached overbought territory yet, where it would be a little bit too dangerous for me. Lang points out that Mastercard stock hasn't just been flying here. It's been flying on high volume, and you can see that that's a spike in volume. And the on-balance volume is pushing higher in a very encouraging way. I told him people don't look at that enough. Here we go. That's the subtraction edition. As he sees it, the stock has legs, but there's a powerful sibling resistance of about $35 from here at 573, which is where the stock was trading before a gap down in January. Lang betting Mastercard can challenge its January highs in the not-too-distant future. This one also reports next week, and we know that Mastercard's been a voracious buyer of its own stock. If they announce any kind of additional capital return, either an increased buyback or dividend boost, well, that could give the stock wings.

Now, finally, there's one that has been near and dear to me for as long as I can remember, and that's American Express. Now, this only has 10% of purchase volume with fewer cards in circulation, but their cardholders tend to spend a lot more money. Plus, they charge fees for their best cards, basically making you pay for access to their generous rewards programs, but it's a fantastic business model. But remember, they do have credit risk. So, what does Lang see in the daily chart? Okay, American Express has been flying since early June, just like Visa and Mastercard, after it broke out above its 200-day moving average. Lang points out that it tested that new support level several times, then finally made a nice jump higher on strong volume. In his view, that's very successful when strong volume goes up like that. Meanwhile, the MACD line is still flashing a buy. Let's go there. Black line crosses the red, right? And this stock's been strong at a time when the market's been weak. Lang thinks it's likely to be smooth sailing until the 350 level, which gets closer to the February highs of 370. That's where the sellers came out last time. Now, I've got to tell you, in his view, American Express is the best in class. Given that we've seen big numbers in travel here, Lang expects that AXP will shoot the lights out when it reports on Friday. This Friday. Now, I agree with him that this company is best to beat. But I also want to point out that American Express's stock, no matter what they seem to report, tends to sell off in response to earnings on that Friday, even when the numbers are terrific. Then it gradually finds its footing afterwards and mounts strong rallies in between quarters, which is why I always say, you know, around like 10:30, 11, you might want to buy this one. I'm not kidding. It's been a good prediction so far. Here's the bottom line. The charts in Bob Lang suggest the big three credit card companies are poised to report excellent results this earnings season, allowing their stocks to keep running. I think he's got a point. These three have run up dramatically over the past few weeks, so they're coming in hot. That often makes things a little more difficult. I almost hope that they report good numbers and sell off anyway, giving you a better buying opportunity, as all three of these are remarkably good companies. Now, we're going to take some calls, and we're going to start with Jim in Wyoming. Jim,

Okay. I think you can actually win now on PayPal on either a return or a takeover. Alex Chriss is there. I know he had a hard time at Hewlett-Packard. I don't know what he can do with PayPal, but PayPal's got suitors. Stripe is interested. Apparently, that was old news. Stripe is still hanging around. But I think at 10 times earnings with the possibility of a suitor and maybe new management to turn things around, I think it's got a good risk-reward. Not a great one. Not a great one, but a good one. I do prefer the other credit card companies. And I'm not as big a fan of buy now, pay later with PayPal. I like the buy now, pay later option of Affirm. The charts interpreted by Bob Lang suggest that the credit card stocks can keep running. I'm hoping for kind of a little pullback to get a better price. Much more Mad Money, including my exclusive with, wow, 3M. Then what will it take for the market to appreciate the software stocks again? If they can, I'm taking a look at the beaten-down cohort to figure out what's going on. And of course, all your calls, rapid fire, in tonight's edition of the lightning round. So stay with Cramer.

Look at the stock of 3M run. Ever since Bill Brown took over as CEO just over two years ago, this industrial titan has been undergoing a remarkable turnaround, and it's really starting to pay off for shareholders. This morning, 3M reported a magnificent quarter. A handy top and bottom line beat with organic revenue growth north of 5%. Stunning. Even better, management raised their full-year forecast, which is why the stock shot up over 7%. I actually thought it should have been higher. Earlier today, for the first time since he took over the company, we had the chance to speak with Bill Brown, the chairman and CEO of 3M, for an interview. Check it out.

Mr. Brown, welcome to Mad Money.

Well, I have to tell you, I usually don't start like this, but I'm so proud of you. I think that you told me this company could be saved and grow again. I remember when you took the job. You've always kept me up. Tell me about your commitment to excellence and innovation and returning 3M to the company we remember it as.

Well, I'm glad you started with organic growth because there was a time when I would interview the CEO of 3M and they would talk about the percentage of revenue gain that was from new products, and then that stopped being talked about, and some legal issues that I didn't hear talked about on the call, thank heavens, started to dominate the discussion. Are we back to where we can say, you know what, in our pipeline we see maybe 25% new growth coming out?

Well, the old 3M always had, it always went to their absolute best annual, and then when it was put online, they would have, it would look at it, it was the periodic table, and you would click on each one and you would see all the new products that you had created. I now feel like you can go back to that, particularly because I'm seeing what you're doing in the data center as a very good place to start with the Microsoft deal.

Well, that's something you taught me. I mean, we talk about on the conference call these places people don't realize they're dirty, and dirty shuts them down. And if you shut them down, that's billions of dollars that can be lost. Yours cleans up a clean room.

Well, I'm glad you... I mean, what I'm trying to get across to people is that if it works for one, it's going to work for all. And you're just at the beginning, and that's how you have such a good roadmap. I also think that you're involved in an industry that I love, which is industrial safety, because no one's ever going to come out and say, you know what, this year I think we need less safety.

Now, one of these, I don't want anyone to think I haven't thought about it. There's PFAS, these are so-called forever chemicals. There's a combat arms decision, but I think you and your predecessor have worked mightily to make it so that should no longer be the focus of people who are thinking about investing in the stock of 3M.

Well, I want to leave with that notion. I'm going to hold up a board game. It's called Stocks and Bonds. My father worked proudly for 3M selling Scotch tape, sashing, ribbon, and games. And he worked for many people, and he told me there was only one company that treated him like an individual, not just some sort of cog. It's 3M, and it sounds like that's exactly what you're doing now at this company.