Mad Money 01/16/26 | Audio Only

Hey, I'm Cramer. Welcome to Mad Money. Welcome to Craig America. Other people, my friends, I'm just trying to make a little bit of money. My job is not just to entertain, but it's also to teach. So call me at 1-800-743-CNBC or tweet me at Jim Cramer. This market is kind of just meandering. It's erratic. It hates the banks one day, likes the banks another, despises big tech one day, favors small tech the other, passing on semis except the ones with the least intellectual property, not liking Nvidia like in SanDisk. And yes, this was a week of magical investing where you buy any crazy new small cap thing and you turned out to be making a lot of money. Just make sure though it was called nuclear power or space travel or quantum computing or crypto. As long as that was in the title, it made you money.

Once again, the averages tell you none of this. Dow dipping 83 points, S&P sliding 0.6%, and the Nasdaq inching down 0.6%. The indices just percolate along again, punctuated by bursts of small cap buying. So, what will next week bring? Well, why don't we go to our game plan to find out? Now, Monday is Martin Luther King Day. Okay, that's a day dedicated to service. Everything's closed. But Tuesday, we're right back in the earnings suit. Dr. Horton, the giant home builder, puts its numbers up. And so far, the home builders — I look, to call them disappointing is too positive. That's the bad news, though. The good news is that we're beginning to see green shoots in the housing sector. Pricing has come down. Mortgage rates have come down. There's even talk about allowing you to use your 401k to buy a home without paying any kind of penalty. All right, that's up to the president. We'll see how serious he is about this potentially groundbreaking plan. It would certainly send the stock of Dr. Horton much higher along with the rest of the homebuilders.

3M also reports, and this conglomerate has been quietly surprising people lately. CEO Bill Brown, formerly of L3Harris, has been putting his stamp on the company ever since he took over as CEO about two years ago. Known as a vicious competitor, he's made the company far more nimble. I like 3M ahead of the quarter. I like Bill Brown ahead of many other CEOs. After the close, we get results from Netflix. I expect a treatise on why the company needs Warner Bros. Discovery, the object of its affection, and is willing to pay a fortune to get it. How big a fortune will it be? I think that's going to be determined by opponent Paramount Skydance, which also wants the property. If Paramount, by the way, would just pay $34, this whole saga would end.

Next, I'm a big believer in the travel theme. From the end of COVID until today, I think it has never left us. Remember what I always say: that we are long on money and short on time, which is why I would buy United Airlines ahead of the quarter along with Delta, American Express, Booking Holdings, and Marriott. Those are what I'm going to be talking about next week, and we call it the Big Five travel. They tend to trade all together, and they are all terrific.

Wednesday morning brings two stocks that are hard to keep down: Johnson & Johnson and Charles Schwab. J&J's become a pure play on pharma by spinning off its orthopedics division. That's smart because orthopedics happens to be a commoditized business. Meanwhile, its pharma business has some of the best drugs in the pipe, and they don't really shine without the knee, hip, and joint business holding them back. J&J still has a talc overhang of people willing to sue the company for all sorts of cancers allegedly caused by asbestos in their own baby powder. Now, I'm not saying these lawsuits don't matter. That would be heartless. I am saying that they no longer matter to the stock now that J&J is fighting each individual claim, which can be daunting to the plaintiff bar. I was intimidated by the lawsuits myself and sold it for the investing club. That was wrong. I regret listening to the Cersei sirens.

How about Charles Schwab? All right. This has become the repository of a big chunk of a gigantic pool of money that's flowing in from baby boomers to the alphabet generations, said to be something like a hundred trillion dollars. That's a wall of money that I discuss in "How to Make Money in Any Market." I think Morgan Stanley through E*TRADE — what a good quarter, by the way, yesterday — Robinhood and Schwab are the three biggest beneficiaries of my aging generation.

Thursday morning, we get the latest reading from the PCE price index. Now, that's a key inflation gauge, and I think it'll show a restrained set of numbers. We will have to endure endless Fed commentary. Save it. Trump's going to pick someone to be Fed chair who will ram through cuts. That's all you need to know. Procter & Gamble reports on Thursday. Now, listen to me. I don't expect any fireworks or anything really good out of the company that's had to pre-announce a number of negative factors ahead of the quarter. So why the heck do we own Procter for the Charitable Trust? Because it has a new CEO, because everyone knows the brands are tremendous, most of all because the stock's down so much that I know it can bounce, especially with that near 3% yield. I'll explain more after the quarter when we hold our monthly investing club conference for the club. This is Thursday at noon. We do a club call every single month. I don't want you to miss it. I think we do more teaching in that than we do anywhere else.

Another Cramer fave, GE Aerospace, also reports that morning, and given all the backlog of planes, I can't imagine it will be anything other than spectacular. And I don't think that "spectacular" is too positive a word for a company that's captained by the great Larry Culp. I don't know if you saw him. We were up at Harvard Business School. I think he's tremendous. Now, we know copper and gold have been red-hot. So, I have to believe that Freeport-McMoRan, a copper and gold producer, will get its fair share of money coming in. I like gold. I think that even up here it can still be bought. As for copper, it's a little pricey, but it is needed in the data center. Look, it's a twofur. The stock has tended to go down after reports.

After the close, Intel reports. This stock's been flying ever since Lip-Bu Tan came in as CEO. Under his leadership, Intel started to reclaim the mantle of America's best semiconductor manufacturer, made in America. Of course, given how competitive that world is, Intel's actual earnings may not be big enough after this run. You know what? Let's give this one a rest. Okay.

We also get results from a company we own for the Charitable Trust called Capital One Financial. You've probably seen their ads. Capital One's the giant credit card issuer that got hammered when the president suggested earlier this week a temporary cap on credit card interest rates. Remember, that was last weekend. I get where he's coming from. Okay. But if you cap those rates, most Americans simply won't be able to qualify for a credit card. These companies would rather stop lending than just lend at a loss. Remember, it's unsecured debt. I think the president's moved on to the next issue, which is why the banks are rallying again. Capital One's going up with them. The company has plenty of cash. I hope it'll talk about its humongous buyback on its conference call. We also want a game plan about what it's going to do with its Discover credit card network. That could be gigantic, but it hasn't told us enough yet.

What else? I think that the lone surprise blowout next week will come from Intuitive Surgical, which had a monster quarter last time. But I bet that the numbers still aren't high enough. That means that the estimates can go higher. One day, these upside surprises will come to an end, I think, because competition from Medtronic may matter. Even J&J wants in this, not yet.

The food stocks have been miserable, but one that still has a premium multiple because of its impressive growth from last year is McCormick. We're going to — well, you know what? We have to see if that can stick. Now, I liked this stock before when the growth was from overseas. I frankly don't know if it's capable of really beating the numbers anymore, though. The packaged food business, I'm calling it the new coal in this market.

Lots of people have been loving SLB of late. That's the old Schlumberger. They're seeing potential contracts in Venezuela for this oil service company. I just look at the price of crude, though, below $60 a barrel. I think that it's very hard for SLB to deliver special numbers when it reports on Friday.

So here's the bottom line. It's an awfully odd week. This second week of earnings season is as light as the next week is heavy, except for a couple of cases. I think it's best to keep your bat on your shoulder and hope for a better set of pitches. Let's go to Jerry in Missouri, please. Jerry, take my call. Thank you, Jerry.

Holy cow. You know what? I was trying to figure out which one, which one, which one, because I've been watching this jumping bean, and it worries me that it's so erratic. It's almost like there's not enough float. But I'll tell you the truth. In "How to Make Money in Any Market," I go over a couple of stocks that I think could be future winners, and I include Reddit. So I'm not backing down. I like the company Reddit right here. Let's go to Larry in California. Larry, take my call.

Thank you. And I miss him. That's what it was. Reverend Jim Bob, what's happening?

Do you know that Lam's got one great CEO in Tim Archer? And I am concerned — Tim was so good when I sat down with him when he came on the show, he told a great story. I'm not going to be against it. I actually think that you can buy something, but the market's very overbought by the oscillator that I use, the S&P. If you want 100 shares, you buy 25, but then you must wait for it to come down. I can't count on it continuing to buy a parabolic move, even for the best of the best, and that is the best of the best. Ken in California, take my call.

Okay. So, we have to understand this, Ken. This is a cash flow story, not an earnings story. The cash flow here is bountiful. We own it for the trust. I insist that you continue to own it. I think that Kelly Ortberg is turning the corner. It's my favorite stock in the travel trust. It's up 14% for the year. Booyah.

We'll get a wave of earnings next week, but aside from a couple of cases, I think it really is best to keep your bat on your shoulder. Wait for a better pitch from this market. Not much slim pickings for next week on Mad Money. Speaking of earnings, J.B. Hunt's numbers just crossed the tape last night, and I'm trucking through the results to see where things stand in the freight market. Then, what the heck happened to Aquestive Therapeutics this week? I'm going to break down what's behind the stock's hideous decline. I know you called about it. We're going to keep telling you why it's moving lower and a painful reminder of those chasing speculative stocks. And please don't miss the latest round of America's favorite game. That's called Mad Diversified, where I survey your portfolio to see if it passes the test. So stay with Cramer.

Last night, we got earnings from J.B. Hunt Transportation Services, the trucking company with a stock that has shot up more than 50% since the end of September. Over the past few months, we've seen some big moves from these transports. It's almost like we felt like there's a coming out of the mollycoddled freight recession happening. So, is that what is occurring? Well, technically, when J.B. Hunt reported, the numbers were indeed mixed: nice earnings beat paired with a small revenue miss, and most of that earnings beat came from cost cuts. If you were hoping for a strong recovery in the freight business, well, this definitely wasn't it.

Now, when you drill down, J.B. Hunt saw declines in revenue per load for both its intermodal and truckload segments. There was a decline in trucks for its dedicated contract services business, and load volumes were down for its freight brokerage and intermodal units. All of these divisions beat revenue expectations except for dedicated contract services, which came in pretty light. Still, J.B. Hunt managed to deliver solid earnings altogether thanks to its cost-cutting efforts. Throw in its $923 million in buybacks last year — hey, that's a significant amount for this sub-$20 billion company — and its earnings per share grew by 24% year-over-year. And remember, this is an incredibly well-run trucking company. So overall, J.B. Hunt had pretty solid numbers. I'm not going to scoff at nearly 25% earnings per share growth, even if it is from cost cuts and buybacks.

Unfortunately, what we did not get from J.B. Hunt was any real sign that the freight market's making an actual comeback. These guys were downright somber. On the call last night, CEO Shelley Simpson began with a bit of a retrospective on 2025. She explained that J.B. Hunt entered last year with a lot of optimism for improvement in the market, the end of the freight recession, but, quote, "when the external environment shifted," end quote, meaning that when the tariffs hit, the company had to change its strategy, focus on execution and cost controls. When the conversation turned to the state of the freight market and the outlook for 2026, I was a bit disappointed.

Simpson said, I'm going to quote here: "As we move into 2026, the freight market feels fragile." End quote. That's one of those words you never want to hear in a conference call: fragile. She went on to explain that, quote, "capacity continues to exit the truckload market, and we are testing the elasticity of supply." End quote. Now, without much optimism about the broad market recovery, Simpson said that J.B. Hunt will focus on execution and cost controls, just like last year. I'm going to call Simpson wary.

After some long-winded prepared remarks from the heads of the company's various units — I tell the truth here, a lot of heads — we got to the Q&A portion of the conference call, where the very first question was about Simpson's classification of the freight market as fragile. Her answer in the Q&A section was more constructive. She said she was referring mostly to the supply side of the market. A lot of supply has left the trucking market in these past few years, and that's not likely to come back. And with so much supply now out of the market, she thinks that even, quote, "just a little bit of an uptick in demand," end quote, could cause much better pricing dynamics for trucking companies. That kind of fragility would be very good for Hunt. I started thinking that's why the stock's been going higher.

But even Simpson's more constructive answer was filled with caveats. She called customer demand mixed, and she said the customers always tend to be more optimistic, but J.B. Hunt tends to, quote, "be a little more realistic and a little more wait and see," end quote. And after explaining that the lack of supply should cause better pricing with just a little more demand — so far, so good — Simpson then quickly added, quote, "We're not holding our breath." End quote. What a killjoy. In other words, when the freight market turns around, J.B. Hunt should be able to make a fortune, but we're clearly not there yet, and management doesn't seem to know how long it will take.

In terms of the market's reaction, Wall Street didn't really know what to do with that update from J.B. Hunt. Initially, the stock pulled back in after-hours trading last night. Immediately after the quarter was published, shares fell more than 6%, and they were down in pre-market trading today, opening down over 3%. But the stock quickly recovered after the opening, briefly turning positive at a couple of points today, then ending the day slightly in the red, down about 1%.

Overall, I think this was a fine quarter for J.B. Hunt, if not the rest of the industry. The company's strategy for a lean freight market is clearly working pretty well, and everything they're doing right now will put the company in a strong position when the freight market recovers. That said, after the stock's recent run, J.B. Hunt's stock now feels pretty darn expensive, trading at over 27 times this year's earnings estimates. That's like the same price-earnings multiple as Nvidia. As long as management isn't saying anything particularly encouraging about the freight business, it's tough to justify paying 27 times earnings for this thing. If you don't know what the price-earnings multiple is, may I suggest the chapter in my book?

More important, this quarter was definitely not positive for the rest of the trucking space. As J.B. Hunt sees it, the demand situation leaves a lot to be desired. This company is the market leader, so it can do things to take share from its competitors when the market's weak. But everybody else just has to cope with a bad environment. Hey, by the way, speaking of competitors, just this morning, FedEx filed its Form 10 registration statement for its previously announced freight spin-off. Now, that starts trading independently at the beginning of June. This deserves a lot of attention, people, because it's certainly more than I can give you right now. But let me just say, FedEx Freight could be a very compelling piece of paper if it gets spun off at a reasonable price. And by the way, they seem like very upbeat people.

Here's the bottom line. I was watching the J.B. Hunt earnings — remember, they're the top dog — last night to see if there was a recent rally in the trucking stocks that could be justified by newfound strength in the freight market. But while we got a lot of reasons to like J.B. Hunt, we got very few reasons to feel good about freight in general. Mad Money back after the break.

All right, this is a little complicated. You know how much I love the viewers. We got to do this. This week, we've heard a lot of great stories from big pharma. But I want to remind you that when you speculate on drug stocks, it could easily blow up in your face. As much as I believe in using part of your portfolio for speculation — you know, I say that in "How to Make Money in Any Market" — it is very risky, and that's why so few experts are willing to endorse it. And for the sake of honesty, we need to cover our speculative losers as well as our winners.

Which brings me to Aquestive Therapeutics. It's a biopharma company that came up with a new delivery mechanism for epinephrine. It's a dissolvable strip you just put in your mouth to deal with a severe allergic reaction rather than stabbing yourself with an EpiPen. Now, I first heard of this one back in September when I got a call during the lightning round. A week later, I gave the stock my blessing. Aquestive was waiting for FDA approval on this epinephrine strip, and it's called Anaphylm. And I told you I thought it was worth taking a chance on, but only with money you could afford to lose. I just thought it seemed like a really great idea.

A week later, the CEO came on the show, and he was very enthusiastic, of course, about Anaphylm's prospects, arguing that it had the potential to become a blockbuster drug. I agreed. Now, last Friday, Aquestive got slapped down by the FDA, and the stock plunged 37% in a single session before losing another 15% this week. So, if you owned it, you did get hammered. Initially, this one was a winner. Aquestive was trading just below $5 back then, and it climbed as high as $7.55 last October before pulling back and stabilizing around $6. But after this meltdown, it's trading at just three bucks and change.

So, what went wrong here? And something did go wrong. Okay. Last Friday, Aquestive announced that it had received a letter from the FDA where the regulators, quote, "identified deficiencies," end quote, in the company's new drug application for Anaphylm. The FDA says these deficiencies, quote, "preclude discussion of labeling and postmarketing commitments at this time," end quote. Oddly, in a comment included with the announcement, Aquestive CEO Dan Barber noted that the FDA letter did not specify the deficiencies, which I've got to believe makes them harder to address, don't you? Still, Barber said that Aquestive is, quote, "working to understand and resolve the concerns," and he expressed confidence that Anaphylm would still be approved.

So, I think this whole thing is a little bewildering. For some additional context, I went to, quote, "sell-side research" from Leerink Partners, who specializes in health care, and noted that this type of notification from the FDA, quote, "historically has been a significant speed bump for other biotechs seeking FDA approvals," end quote. Adding, quote, "We do think this news brings an increased likelihood for delay and/or complete response letter for Anaphylm," end quote. By the way, a complete response letter is real bad. That's when the FDA sends you what they — when they reject your drug application, explaining the reasons for the decision.

The Leerink analyst went on, though, and said the road ahead for the company will largely depend on the nature of the FDA's deficiencies, how quickly AQST can address them, and how much it might cost. End quote. And the tricky part is that the company claims they don't even know what the deficiencies are. Well, that's going to make it pretty hard to address the decision date set by the end of the month, don't you think? At this point, the stock's nearly been cut in half for the week since the news broke. Many investors simply aren't interested in waiting to see what happens next.

But how should you be thinking about Aquestive now that the stock's been obliterated and we have reason to believe they might struggle to get the big drug candidate approved? This is the question. First, despite the ambiguous slapdown from the FDA, Aquestive maintains that all of its engagement with the FDA has been, quote, "highly collaborative," end quote. And the company said that since they received the letter, the FDA has repeatedly said the review of Anaphylm remains ongoing. These guys still sound really confident about their drug and their ability to get it approved both here and overseas.

At this point, I'm not sure if they deserve the benefit of the doubt, but it's worth keeping in mind. Now, on top of that, Aquestive did this secondary offering in August, selling 21.25 million shares at $4 to raise $85 million. Now, that's one of the reasons why I was willing to recommend the stock for speculation in September. These early-stage biotechs often have to raise money by selling stock, something that can hammer the share price. So, I like that the big secondary offering had already happened. See, it wasn't in front of us, but if it was in front of us, I'd be very worried. Aquestive ended up finishing 2025 with $120 million in cash and equivalents, which they say is enough to get them through the approval process and then launch the drug here in America. I thought that was somewhat encouraging, assuming they can still get FDA approval for this thing.

Ultimately, if you got stuck with this big loss in Aquestive, I wouldn't be looking to sell it down here after the big move lower because there's still some hope remaining that Anaphyl could be approved by the FDA. Not to mention possible approvals overseas, but I have far less confidence than I had before. So, if you don't already own it, there's no reason to stick your neck out and buy some. What bothers me the most about this whole situation is the ambiguous nature of it. When the FDA tells you that they can't go ahead with the approval process until you fix your new drug application, but then they don't tell you what's wrong with the new drug application. Doesn't that feel fishy to you? This drug was fast-tracked by the FDA and then they waived the usual advisory committee meeting. So, it looked like it had a real high chance of being approved. That's what I was buying into. Besides, at this point, it's been a week since they got the letter. Does management still not know what the problem is? If they don't, that worries me.

Now, more broadly speaking, this is also a really important lesson about the dangers of speculation, a painful lesson. Bottom line, you need to understand the risk when you're buying a speculative stock. And if you decide that you're not okay in a situation that can end up like Aquestive, I got to steer you towards many of the large-cap pharma companies that I spoke with earlier this week at the J.P. Morgan Healthcare Conference. Those stocks offer less potential upside, at least in the near term, but they're not going to get cut in half over the course of a week thanks to a single decision from the FDA. Let's take some calls on what I think is a discouraging situation. Let's talk to Harrison in California. Harrison,

Well, first, thank you for buying How to Make Money in Any Market. I would greatly appreciate that. I think UNH is low enough you want to buy it. But you know what came down today that has a better yield and I think is really better? I think it's CVS. Remember, you get Aetna with that and you've got a situation where David Joyner has really cleaned up a lot of the problems. Let's buy CVS, not UnitedHealth. I need to go to David in California. David,

You're quite welcome.

Okay.

Okay. I worked for GE, so I'm not allowed to own stock. I want to make that point, but I got the same thing because I had worked for them before when they paid me with stock. I took a hard look at GE Healthcare and decided that it didn't have anywhere near the things that were going for GE Vernova and GE Aerospace. And I think you should sell the stock. I just don't think it's what you want to own. If you want to own a medical device, you want to own Medtronic. Okay, or Abbott. But Abbott reports next week, so why don't you wait to see how they go? Let's go to Rob in South Carolina. Rob,

Yeah. Yeah, it's 30 degrees this morning when we woke up.

Yes. I think that Goldman Sachs just put out a buy recommendation on it and I think that's a better spec than Aquestive. That's the whole point. So you want something at least a major firm has come out and said vetted it. They have the money. I say go with CRNX, but it's a $55 stock. See, it's not a little dollar stock and people don't want to buy four to six dollar stocks. Don't think about whether the company's good, not whether the price is right. Okay, look, the price action in Aquestive is a perfect lesson to the dangers that come with speculative stocks. And if you want to invest in the healthcare space, let's stick with something really positive like the companies that I spoke to last week. Or I'll tell you, I really like CVS. I think that gentleman said UnitedHealth, let's pivot to CVS. Good dividend, great management. All right, much more on it. It's Friday, which means we're going to play the latest round of Am I Diversified. More teaching coming up. The citizens of Cramerica are sending me their portfolios and I'm judging if they're diversified enough for this market. Then Micron broke ground on its new facility in New York today. I'm telling you what it means, what it really means for the state of the semiconductor industry in America. Of course, all your calls rapid fire in tonight's edition of the lightning round. So stay with us.

All right. Lately, we've seen the market broaden out quite a bit so far in 2026 with previously unloved sectors catching a bid this year. And I want to make sure you're taking advantage of what I think is a great rotation. That's why tonight we're playing the latest round of Am I Diversified. Now, what do you do here? Okay. Well, you call me, you tell me your top five holdings. I tell you if your portfolio is diversified. Now, maybe you got to mix it up a little. Let's start with David in Alabama. David, what do you got for me?

Okay, let's go.

Wow, you're diversified, but we may have to do some work anyway just in terms of a stock I'm worried about. But okay, Cheniere, that's liquefied natural gas. I love that. Simon Properties. We think David Simon's the best mall operator there is. These are really fantastic. Amazon we know is retail, but it's also tech. And Broadcom is the company that makes the chip, by the way. They make the chip for, I don't know if you knew this, for Google. They do a lot of other things, too, but they're a tech company, mostly semis. Then VICI is the one I'm worried about. They're a REIT that I don't like the properties of, and we have two REITs. So, let's get rid of VICI. I want to add J&J. We'll put that in there because you need a healthcare company and then you'll be fine. But that must be done. Okay. I wish it were earlier in the day because I want you to do that right now. And thank you for being a member of the club and we'll see you at Thursday's meeting. Okay. Let's go to Betsy in California. Betsy.

First, I want to thank you for those kind words, that was really terrific. I hope I always live up to your standards. Okay, this is a terrific semiconductor manufacturing company. This is my favorite gold company. This is one of the best machinery companies in the world. This is my favorite aerospace play. We own a big position within Travel Trust. And this is an amazing financial, aerospace, machinery, semi, and gold. Bingo. Do nothing. I love it. Let's go to John in California. John,

Thank you.

Okay, so here are the companies.

Let me go to work again. Thank you for being in the club. Don't forget Thursday. Okay. Uber we know is transport. Amazon we're going to call it right now. We're going to call it retail. Stick with me. Philip Morris is tobacco. They also are anti-tobacco. It's a really strange amalgam. American Electric Power, one of my favorite utilities for multiple years. And Nvidia's tech. And I knew it was going to trade. I told Jeff Marks it was going to close down when it was up a dollar and a half today. I said, 'Watch this. It's going to close down.' It did. It closed down badly. Okay, so we have a semiconductor, we got transport, we got retail, we have tobacco, and we have utility again. Fantastic. Okay, now let's go to John in, I know how to pronounce it, Louisiana. John,

Oh, wow. What a fantastic list. Okay. Medtronic we know is medical devices. We know AbbVie, we're going to call that pharma. Okay. Energy Transfer is a high-yielding pipeline company that I really like. I actually emailed Anna Boutin this morning urging her to come on the show. I recommended the stock at 3. It's a 12. That's great. And Honeywell, it's finally getting credit for all the things it's doing. Yes. So, we have an aerospace, couldn't use it as a breakup play, aerospace and security play. We've got a bank, we've got a great pipeline company, we have medical device, and we have drug. And I see nothing to do there other than keep it. Last but not least, we got Michael in Illinois. Michael,

Done your way.

Yes.

I like the Bears. Your coach is a leader of men. Okay,

I was thinking about going just today. I was thinking about going to the Super Bowl with Tim Cook, but that's what I did last year. He was in my box or I was in his box, something. Okay,