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Oh, we got a two-tiered market going on here. A real best of times, worst of times situation. The first tier is making you a fortune, but the second tier is downright awful. It's the K-shaped market. There are the beloved stocks that have something to do with the data center, and then there's the forlorn part of the market, basically everything else. You can never see this in the averages. Dow dipping 63 points, S&P advancing 0.12%, NASDAQ edging up 0.2%.
Some days like today have some of the data center complex in retreat even as the mainstays plow forward. But you can still sense that any pullback might just be temporary and the result of just short-term overheating. I regard these pullbacks as buying opportunities, provided they take you down at least, say, 5%.
They're refuges from the hazards of the war, as they don't really correlate with energy other than on their own grid. More on that later. They're separate, apart from all others. Can the AI-related data center stocks keep winning? Let's talk short-term and long-term.
Last week we had an explosion of buying related to an incredibly exciting story that is Intel. Today, many of the stocks that were deemed copycats of Intel were pancaked. I think you're getting a real good chance to buy them. And I don't want to get ahead of myself. That said, I believe the companies that are involved in the CPU complex will do very well for the rest of the year. Mainly that's Intel and AMD. But don't forget ARM Holdings, really down badly today.
We're going to find out about the real health of the data center come Wednesday when we've got Amazon, Alphabet, Meta, and Microsoft all reporting. All four have spent fortunes on the data center buildouts. Will they pause spending, or is it too important to keep investing in AI, especially because they're now seeing some returns, or perhaps these returns might be right on the horizon? It's really tough.
I'd love to hear that the hyperscalers who want to spend more are already getting a return. But those who keep spending and see nothing, no, you know what? We're sellers. And if they aren't spending, they better have a plan for more compute, or they can be like Apple, perhaps only there's only one Apple.
They report Thursday. Thanks to its huge user base, Apple can lean on Google search and Gemini chatbot in seamless fashion. They don't need to spend a ton of money. Now, I expect a ton of volatility in these stocks because the market's mercurial and the consensus can change on a dime.
When you listen to the conference calls, pay attention to what the hyperscalers say about their AI capital expenditures. That's what we're all watching. That's really the only data point that matters. But that day, one thing's certain, though: seemingly out of nowhere, we're seeing a tremendous level of interest in Nvidia, which doesn't even report this week.
It's enough to make you write off all the stories we've heard about how Amazon and Google have their own competing chips that will eat Nvidia alive. Although, I have to tell you, I think their competing chips are terrific. I saw this Nvidia explosion chart on Friday when the stock finished up more than eight bucks. I noticed there had been multiple sellers that lived at the 200 level, and once they were cleaned out, this thing went up like a rocket ship. There was no stock supply. None.
There's no sellers. It happened again today. Lots of buyers, no sellers to speak of. So the buyers took the darn stock all the way up to $216, up $8. What an incredible move for the biggest stock in this market. Now, Nvidia's been a late bloomer here in part because so many big accounts already owned it, but I guess enough firms didn't that it could still have such a rapid jump.
You know me, I say Nvidia, don't trade it, own it. The memory and storage stocks keep bumping up too. Micron up another 5% today. SanDisk jumping up another 7%. They make essential components for servers that are in short supply, along with Seagate and Western Digital, which took a breather today.
Still though, we saw a narrowing of the semis after a remarkable 37% run this month alone. Now they're in, I'd like to think they're in armrest and relaxation mode. Throw in the four horsemen of Wednesday and you could get a terrific opportunity to go back to an Intel if it goes down, or AMD or ARM Holdings, as well as Lam Research and Applied Materials. I regard those as the two best capital expenditure stocks.
Obviously, I'm inclined to keep betting on AI. I am a disciple of Jensen Huang, the CEO of Nvidia, who preaches the coming of the fourth industrial revolution. What is the fourth industrial revolution? It's a revolution of thought, where we'll be creating intelligence out of data centers filled with equipment that are known as knowledge factories.
They'll come up with things we've never heard of, which is why it's so difficult to figure out whether things aren't so expensive. If we hear there are things we never heard of, we can't put them in our numbers. Granted, we haven't been able to reap the gains yet other than a few bits and bobs of cost savings, but no one wants to admit that.
Fact is, though, this industrial revolution, like all the previous ones, is a revolution in productivity. We will all be able to do a lot more with less and think much further than our brains currently let us. I think that makes the story unstoppable. But we're investing, not prognosticating.
As much as I believe you can't derail the AI revolution, there will be times when you won't be able to make money with it; it just won't be productive for your portfolio. That's not because of the companies themselves. I fully expect Nvidia will be at the heart of everything that comes. The long knives that have been out for it for so long, they're gone.
However, I know that bull markets can be killed by an aggressive Federal Reserve. Right now, the incoming chair, Kevin Warsh, is a lover of low interest rates, so it's not something we need to worry about. But a bull can also be killed by excess supply. Too many big IPOs and it collapses under its own weight.
Today, jury selection began in the case of Musk versus Altman et al., who run OpenAI. Musk wants money and the removal of the current leadership, specifically CEO Sam Altman and President Greg Brockman. It's a very convoluted case, but for our purposes, only one thing matters: when this case is resolved, will OpenAI be able to come public?
If so, it will suck up a ridiculous amount of money because this thing could have a trillion-dollar valuation. That money needs to come from somewhere. Most likely it will come from the rest of the market alone. An OpenAI IPO might not kill the AI revolution bull market, but you know that Elon Musk is going to bring SpaceX public at what is said to be a $1.75 trillion valuation.
Given that it's Musk, it could turn out to be two and a half trillion, right? Again, that'll sap up a huge amount of money from the rest of the market that might have been in some of the other data center stocks. And then lurking, lurking, lurking is Anthropic, which is the blessing of so many large institutions because it works with the enterprise, and the enterprises are loved on Wall Street.
It's sticky. It's not fickle like the consumer. Anthropic is currently valued at about $40 billion. The hunger for this company among individuals and institutions is insane, though, and I think a lot closer to profitability. So it's entirely possible that this one goes out at a trillion dollars.
When you take all the money that's headed to the three of these likely deals, you can only imagine how much every other stock could suffer. Yet, if you ask me, that is the real risk to this market, not all the other things you hear about. Here's the bottom line: at the moment, these IPOs are far enough away that I'm not fretting.
That said, if the trial is a fast one and OpenAI has a shot of coming public this year, they might be in a foot race with Anthropic. I don't know which will be the winner, but the bull could be the loser because the bull runs on money in the fourth industrial revolution or not. It just might run out of money if this trio of IPOs goes through the chute at one time.
Let's go to Mona in Illinois. Mona.
Hi Jim. Thank you for taking my call.
Thank you. Thank you for calling.
Yes, I've been following you for more than 10 years now and I totally enjoy your show. And my question today is about Dutch Brothers. Is it a good time to enter, or should I wait for the price to drop a little bit?
For Dutch Bros, I think it's an excellent time to enter. I expect very good numbers. It does have a high price-earnings ratio, so I don't want to buy all the stock at one time, but I think you're right to start a position. I think that's a good call. And thank you for following me. How about Caleb in Texas? Caleb.
Hey, Jim. Just wanted to say congratulations on your 20 years of the show. And so my stock that I'm asking about, I've been investing back in 2024 and I put a good amount of money into it and I'm still investing in it till this day. And I wanted to talk about TSM. Do you still think it has a lot of room to grow?
I like TSM very, very much. I think it's terrific. I remember when it reported last week, the stock went down on a perfectly good quarter. I came on here, I said, 'Listen, I like that quarter. It looked real bad for about 48 minutes, and that's about it. Taiwan Semi is a very good situation.' Let's go to Dimitri in California. Dimitri.
I am good, Dimitri. How are you doing?
Good. I just started watching your show a few months ago and I'm a huge, huge fan. Thank you very much for putting this on. I started reading your book and I'm very impressed with Mr. Hank, a very disciplined man.
My question is on the symbol NVO, whether to hold or drop. It drops quite a bit.
Oh, Novo Nordisk. No, look, Eli Lilly is struggling right here. I think Novo Nordisk is going to lose a lot of share to Eli Lilly. So I say no, we don't want to be there. But thank you for the call and thank you for watching and reading.
I don't know whether OpenAI or SpaceX or Anthropic will be the IPO winner, but bull markets can run out of money, and that's what I'm worried about. What goes up must come down. But is that going to be the case for the semi stocks? I'm taking a closer look at the rapid rise.
Then, have gold prices been acting more like a spec play than a flight to safety? I'm turning to the charts for more about this, the moves in the precious metal. And consumers are looking for a bargain right now. So why is a stock like Ollie's doing so poorly? I'm investigating. So stay with Cramer.
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On Friday, the Philadelphia Semiconductor Index, the SOX for short, shot up 4.3% thanks to a big boost from the stock of Intel. That was the 18th straight day of gains. That winning streak ended today. But this has still been an astonishing period for the chipmakers.
During that 18-day winning streak from March 30th through last Friday, the SOX gained more than 47%. And it's still up 37% for the month of April after today's decline. Now, look people, that's a remarkable run. So we've got to put this thing into some context, because for some it's just too far, too fast.
When you look back at the best months in history for the Philadelphia Stock Exchange, you find that April is already the second best month ever. The only month where the SOX had a bigger gain was February of 2000. Now, that was right before the dot-com bubble burst. I know that's a pretty ominous comparison.
The house of pain. And some analysts have started connecting the dots. This morning, we saw multiple analysts writing about how the SOX was the farthest above its 200-day moving average that it had been at any point since, yes, 2000. And now it's gotten to insanely overbought levels. You know, I'm not going to disagree with that.
How worried should we be then? Honestly, it's probably not as dire as it sounds. Why don't we go back to that list of the best months ever for the SOX? Sure, the number one month came a few weeks before the peak of the dot-com era, but most of these months were not tops. Many of them were either near the beginning of the dot-com period or somewhere in the middle.
The SOX was up 27% in November of 1996. That would not have been a good time to bail in the semis, right? Same goes for June 1999, October 1998, January 1997, January 1999, and July 1997. Those were all months where the SOX gained something like 20% or more, and the tech rally was far from over.
How about the fact that the SOX has gotten very far above its 200-day moving average? Okay, that's true. But again, let's talk context. After today's pullback, the SOX is up 46% above its 200-day moving average. Not perfect. At the end of February of 2000, the SOX was up 96% from its 200-day moving average. We're not even half as overextended as we were back then.
Still, look, I'm concerned too, okay? I don't like rapid moves. I don't like parabolic moves. And lately, we've seen a lot of parabolic moves all over the market, and those are worrisome. I don't want to overreact, but we've been taking some action around the edges for the charitable trust on the sell side.
Now, you'd know that if you're a member of the CNBC Investing Club. I wish you'd join. For example, last Thursday, the charitable trust trimmed some of its position in DuPont Electronics. That is a DuPont spin-off that makes specialized materials for semiconductors, and it rallied 30% from March 30th to April 23rd. No, too fast.
Last Monday, the trust added semiconductor design company ARM Holdings to the portfolio. And then the darn thing proceeded to rally 34% over the next four days. If you go back further, ARM gained over 71% from March 30th to April 24th. So, even though we're big fans of the stock, what we do, we can sell it because I mentioned it, but we downgraded it from a one, which means a buy for the trust, to a two, meaning a buy into weakness, which typically means I try to take something off.
Price matters, and when something surges 34% in less than a week, well, you know what? You got to pull in your horns. You can't be a pig. Now, it'd be one thing if it was just a semiconductor rally like this. But the fact of the matter is that there are all sorts of stocks connected to the AI data center theme that have been making parabolic moves.
We ran a quick screen looking for US-listed stocks with a minimum market cap of $1 billion, which have had gains of 50% or more since March 30th, the day the stock market bottomed. There are 94 of them, including some huge names in semiconductors and networking, like AMD up over 70%, Arista Networks up 49%, Marvell Technology up 80%.
That's in addition to Intel, which I spent plenty of time on already, and all the memory and data storage names that have just been flying. These types of moves worry me. If you want to know what can happen when they go wrong, all right, I'm going to give you an extreme version. It's called POET Technologies. P-O-E-T, POET, like the poet.
Okay, for those who don't remember, we covered POET last Tuesday night as a homework item after I got a call about the stock. I said it was too early stage to get excited about it, with roughly just $300,000 in revenue last year. More of a science project than an established business.
Then I watched in horror as the stock proceeded to gain another 25% last Wednesday. And after an 8% decline last Thursday, it jumped another 29% on Friday. But today, POET announced that one of its largest potential customers, one that I mentioned last week, had cancelled its orders, seemingly because POET's executives may have run their mouths too much about those deals.
Loose lips sink ships, especially ships like a stock. As a result, POET's stock was basically cut in half today, down 47%. That's exactly the kind of thing that I'm really worried about when I see all these parabolic moves. No, not about chicanery, just that, you know, too far, too fast.
Look, I'm not going to scare anybody. We're way beyond that. I'm not going to make any broad proclamations about what the Philadelphia Semiconductor Index's extreme winning streak means for the broader stock market. That doesn't help. Yes, there are some reasons to believe that it might be bad news, the February of 2000 analogy.
But especially if this fever breaks and the market cools off a bit, this kind of action doesn't necessarily mean we're headed for a major top. It means that there might be an opportunity. Here's the bottom line: when you see these kinds of moves, you don't need to freak out, but you've got to be disciplined.
Trim some winners like we've been doing for the charitable trust. Don't chase the parabolic stuff like POET Technologies. And in general, just take a deep breath, keep it cool, and let's wait to see if we have a more benign pullback from these wild past few weeks, setting us up for more gains ahead. If the SOX keeps flying, well, that is when you need to worry. Mad Money is back after the break.
Coming up, gold has long been one of the safest hedges available to investors, but could that be changing? Cramer is going off the charts to see what's happening next.
Let's talk about gold. I'm always telling you to have some precious metal exposure as a hedge against inflation or general economic chaos. And for the past couple of years, gold's given me some tremendous performance. Since the end of 2023, too, it's up roughly 127%, from just over $2,000 an ounce to just below $4,700 an ounce as of today.
Put that in perspective. The S&P 500, which we all love, right, it's up just 50% over the same period. And even the tech-heavy NASDAQ 100 is only up 62%. Gold's long-term outperformance has been a very nice bonus for anyone who believes, like I do, that you should always allocate about, say, 5 to 10% of your portfolio to the precious stuff.
But if I'm being totally honest, even though gold prices have rallied like crazy, the yellow metal hasn't been behaving the way I expected it or it's supposed to. And it certainly hasn't been acting as a hedge for your portfolio. Uh-uh. No way.
Don't get me wrong, we've had some nasty inflation in recent years as well as sort of global economic disruptions, right? So it makes sense that gold could be a winner. But, and this is a big but, the fact is that it's been trading like a speculative asset, not as insurance for your portfolio, for well over a year now. And that's not what I got into it for.
This is something we've seen with crypto, too. As much as we hope that Bitcoin could serve as another effective hedge against inflation, geopolitical chaos, that's simply never been how it trades. Instead, Bitcoin moves practically in lockstep with higher-risk, higher-reward tech stocks. That's not what we want. For all intents and purposes, it might as well be a leveraged bet on tech.
And in times of turmoil, it doesn't protect you from squat. When the stock market is getting pummeled, Bitcoin's usually doing even worse. Unfortunately, I've noticed that gold started to behave the same way. I don't like this. Look at what happened this year. Gold topped out at just under $5,600 in late January. Then it's been sinking, started sinking lower right alongside the stock market when the war with Iran started and oil prices soared.
Everyone was terrified that higher energy costs would trigger a brutal inflationary spiral. Historically, when investors are worried about inflation, gold tends to be a winner. But that's not how it's trading. In March, from February 27th, right before the war with Iran started, to March 30th, when the stock market bottomed, the S&P and the NASDAQ composite both fell about 8%.
A lot of that was driven by inflation fears. Gold plunged 14% during that same time frame. I got to tell you guys, that's crazy. So, at least lately, gold hasn't been behaving like an insurance policy against inflation or economic chaos. When we got inflation and chaos last month, the precious metal did even worse than the averages.
All of which makes me wonder, is it time to take some profits in this incredible run? When gold was playing a static, boring role as a hedge-like asset, you didn't have to worry about this kind of issue. You could say it's a high-quality problem. Back then, you wanted gold in your portfolio no matter what, so it could work when the stocks that you own weren't working.
But if gold's trading like just another risk asset, then we also need to consider that it should be trimmed or maybe even sold outright, because when you're dealing with something that's speculative, you need to be willing to take something off the table. Ring the register.
That's why tonight we're going off the charts with Larry Williams. Now, he's that legendary technician. I love to talk about market historian. He's been the best in the business since I was a teenager because he's not feeling too sanguine about gold here. He's with me on this, or I'm with him. I don't know.
Remember, Larry's got a stellar track record. He nailed the COVID bottom, one of the best calls I've ever seen. More recently, at the beginning of the year, he pounded the table on Costco, and so many people were worried about it in the 800 level. We own it for the charitable trust. It's up a quick 14% since then, trouncing the 4% gain of the S&P over the same period.
In early March, Larry made an even bolder call, telling us he liked the setup for Bitcoin. Since then, it's rallied more than 10%. And just two weeks ago, we flagged Shopify. That stock's up a quick 8%, nearly double the return you would have gotten from the S&P over the same period. These are some massive returns over a very short period of time.
And that's why you should listen when Larry warns that things may be starting to look ugly for gold. Now, take a look at this seasonal chart of gold prices in blue, based on the past 30 years of data, along with the price of gold this year in black. Typically, gold tends to sell off starting in mid-April.
Well, you know, it's a little bit late this time, then drifts lower until it rebounds again in August. In other words, if history's any guide, Larry points out there's been a strong bias for the price of gold to start declining at this time of the year. Well, you could argue it has started, right? It's down. I don't want to bet against Larry here. This is getting ugly.
Now, let's zoom in on the daily chart of gold with that same seasonal pattern in blue. This goes back to January. Larry notes that the precious metal has not made a new high in nearly three months. Typically, you'd expect it to make at least an interim high at this point in the year according to the seasonal pattern, but so far, gold's been underperforming that pattern, which is why Larry expects the usual springtime decline to hit harder this year, maybe much harder.
Beyond the seasonal pattern, Larry's always searching for patterns or cycles that seem to repeat themselves over and over again. When you look at a long span of time, these cycles jump out of the data. So, take a look at this chart of gold going back to late 2021 with Larry's cycle forecast in red.
Here's how the gold cycle's been working. About every year and a half, gold has run into selling pressure that's either created a decline or a halt to its upward progress. This cycle isn't perfect at predicting the future, but Larry says it's been very suggestive of when we should expect major highs and lows. And right now, this 18-month cycle is screaming that gold is due for a pullback.
I thought this was the most frightening of all. I mean, this chilled me. Just check out the weekly update of gold prices in Larry's cycle forecast. He points out that we should expect selling pressure in gold from now through the end of June. At the same time, he doesn't like that silver is performing better than gold of late. I've heard that from other people.
Put it all together, and he feels like the big up move might be over, at least for now. So, here's the bottom line: the charts, as interpreted by Larry Williams, suggest that the price of gold is very likely to get clobbered from here in the next couple of months.
And given how it's been trading lately, more like a speculative asset than a store of value, I don't blame anyone who wants to ring the register here. Listen to me: if you got a big gain in your gold, I'm giving you my blessing to take something off the table. And I never say that about gold.
Let's take some calls. Let's go to Frank, who is in Texas. Frank.
Well, hi Jim. I'm glad to be on again with you.
I am glad that you called, Frank. Thank you for calling.
US Rare Earth, and they're acquiring Brazil's Sierra Verde, I understand. I've got it, and we talked about it before, but is the stock still a good buy? And do you...
Well, it is up 100%. And what we're discovering is that companies that are up between, say, 60 and 100% are rolling over and not going higher. I want to wait for a pullback, Frank. I think it's too risky right here. Let's go to Alex in Oregon. Alex.
Booyah, Jim! Thanks for taking my call. And always shout out to your staff for being super nice. The company I'm calling about is a pretty interesting one. They're kind of like a value-added metals company, but they've got exposure to defense and semiconductor-like equipment. The company ticker is RS. They're called Reliance Inc.
That is a very fine company. And I've got to tell you, there's no... I happen to like that one right after Newcore. I think terrific numbers this very evening. That's probably going to move up Reliance. But there's no problem with that other than the fact that, again, the stock has had a very nice quick move, almost parabolic going higher.
But I can't... I got to tell you, I'm not going to tell you not to be in that stock. It's just a really, really good company and it's not outrageously expensive. All right. The charts, as interpreted by Larry Williams, suggest the price of gold is likely to take a beating in the next couple of weeks. Maybe you got to take something off the table even if you've had it for a long time.
And much more Mad Money. My deep dive on Ollie's Bargain Outlet. Been a lot of conflicting information about the impact of data centers on electricity costs. I'm going to the bottom of this by listening to what the CEOs have to say. And all your calls, rapid fire, tonight's edition of the lightning round. So stay with Cramer.
All right. What happened to the stock of Ollie's Bargain Outlet Holdings? This is one of the big off-price chains. So you'd think it would be thriving when the consumer is feeling the pinch from sky-high gasoline prices. But ever since peaking last August, the stock has been, well, a real dog.
Ollie's is America's largest retailer of closeout merchandise. They buy excess inventory from regular retailers for pennies on the dollar. They mark it up a bit and sell it to you at incredibly low prices. And they are low, believe me. They sell the same merchandise for up to 70% less than you'd find at traditional retailers.
The model is buy cheap, sell cheap, keep the store simple, warehouse-like, and let the bargains do the marketing. So, what went wrong here? It's almost always been good. When the economy gets tougher, we expect consumers to trade down, start looking for deals and value. In other words, they go hunting for the place where the same product is meaningfully cheaper.
Ollie's is built for this kind of moment. At the same time, they also benefit from weakness in traditional retailers because when stores can't move enough merchandise, they need to sell it to somebody before they can bring in new inventory. Ollie's is often that somebody. That's why it's so darn puzzling that the stock's been a real disappointment lately.
The stock's down sharply from its 52-week high of $141 and change, now trading in the low 90s. It's off 16% year-to-date. This is a stock that went from under $40 in 2022 to more than $140 in 2025 before giving back a huge chunk of that move, coming back to $92 and change as of today. Highly un-Ollie-like.
What caused such a savage decline? Very simply, Wall Street's expectations got too high and Ollie's execution couldn't keep up. They never totally dropped the ball, but there were too many missteps given that the stock was trading at a premium to the other off-price chains, which were much more consistent, frankly.
Late last August, Ollie's reported a clean beat on every level and raised its full-year forecast. The stock initially shot up in response, but the gains didn't last. When the company reported again last December, the same-store sales came in weaker than expected. And management raised their forecast, it still came in light versus expectations.
At the time, Wall Street was expecting something great from Ollie's given the Big Lots had just filed for Chapter 7 bankruptcy liquidation. The company didn't come through. When Ollie's reported its latest results in March, the quarter was fine, but not anything super impressive. Sales came in a bit light compared to expectations, but were still up 16.8% year-over-year.
Same-store sales increased 3.6%. Earnings came in basically in line, almost 17% year-to-date. But I got to tell you, I was disappointed by that same-store number. It wasn't a perfect quarter, but it wasn't all that bad. And management's full-year forecast was solid. Since then, the stock's continued to drift lower.
And you could easily argue it deserved to come down because the stock was priced for perfection because it had been pretty well perfect. After this decline, though, the stock's gotten a heck of a lot cheaper if they regain their perfection. At its highs, Ollie's was trading at roughly 37 times earnings. Now, it's selling at roughly 20 times this year's earnings estimates. I can't recall it being this cheap any other time.
Again, the problem is not that Ollie's is falling apart. The problem is that expectations got too high, the stock got too expensive, and other value-oriented retailers were putting up better numbers, generally cheaper stocks. Ollie's became the redheaded stepchild of the group.
I mean, look, for comparison, my fave, TJX, just reported 5% same-store sales growth. Ross reported 9% same-store sales. Really good. Dollar General put up 4.3%. By comparison, Ollie's 3.6% same-store sales growth in the most recent quarter is nothing to write home about. It just wasn't as good as everybody else.
At the end of the day, Ollie's is not TJX. TJX is a best-in-class global off-price machine. It has scale, consistency, brands, apparel, home, and a broader customer base. Ollie's is much smaller with a niche assortment that's more closeout-driven. Its stock deserves to trade at a discount to TJX.
For a long time, Ollie's actually traded at a premium to TJX. When COVID hit, TJX and Ollie's were neck and neck. Now TJX sells for roughly 30 times earnings while Ollie's trades at 20 times earnings. It's flipped. But at the right price, I think Ollie's can begin to come interesting again. It's just too much of a discount.
Is it interesting right now, though? Look, Ollie's still has a long runway. They finished last year with 645 locations. Long-term plans to double that footprint with the goal of more than 1,300 stores. This year alone, they plan to open 75 new locations. That's a lot of new units.
On the conference call, CEO Eric Van Der Valk stated that by combining 10% unit growth with 2% same-store sales growth and equipping to buying back stock, Ollie's is confident they can keep delivering consistent earnings growth in the mid-teens. They certainly have the balance sheet to pull that off.
Ollie's ended last year with $562.8 million of cash and investments versus almost no funded debt. Though it still carries lease liabilities like any brick-and-mortar retailer, the company bought back $73.8 million worth of stock last year and plans around $100 million worth of repurchase this year.
In other words, this is not a retailer that's fighting for survival. It's a retailer with money, real estate opportunities, and a rapidly growing store base. The stock just got ahead of itself. And don't get me started on the loyalty program. Ollie's Army is not a paid subscription business, so I can't pretend this is Costco, which you know I love.
But the rewards and coupons from the loyalty program create a subscription-like behavior: repeat trips, better customer data, direct marketing channel to people who already identify themselves as bargain hunters. Those 17 million members of Ollie's Army, including yours truly, are a real asset.
In the end, Ollie's is not TJX and it may not deserve a TJX multiple, but it also shouldn't trade like a broken retailer. This is a business that got priced too richly, then got punished as investors moved toward bigger, cleaner value names. Now with the stock back in the low 90s and trading at a much more reasonable price-earnings multiple, I think the risk-reward is a lot more enticing.
So I'd say that Ollie's now belongs on the shopping list. The stock seems more fairly priced and cheap right now, even with this multiple contraction. But if the entire market continues to do well, companies outside the data center with low multiples should eventually start to enjoy the fun. Start small.
Buy gradually on weakness and watch three things: same-store sales, new store productivity, and the gross margin. If Ollie's can keep delivering positive comps while opening stores without ruining returns and holding that gross margin, I think this stock can work again. Bold claim because it's been really bad.
Here's the bottom line. When you look at Ollie's, the business isn't perfect and the stock's been frustrating. The stock's been bad. It's still not the best bargain at current levels, but it's certainly cheaper than it's been in ages. In an economy where everyone wants a bargain, Ollie's still has a simple premise that resonates: good stuff cheap.
And at the right price, which may be right here, that may apply to the stock too. Mad Money's back after the break.
Coming up, you've got questions. Cramer's got the answers. Get charged up for a fast-fire lightning round next.
It is time. Time is over. The lightning round is over. Are you ready? Richard in Arizona. Richard.
Good afternoon, JK. How are you?
I am doing well, partner. What's happening with you?
All right. So, short-time listener only because short-time investing. But one of my questions here is that Joby and Joby... W add the problem with Joby.
