Mad Money 08/11/26 | 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 Kramer. Welcome to Mad Money. Welcome to Kramer. 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 educate you. So call me at 1800743 CBC. Tweet me at Jim Kramer. When I'm fishing for tarpon, those giant beasts off the coast of Trinidad, seven miles from Venezuela, I try to keep up with the market. If only because I got a CNBC investing club meeting noon Thursday, so I check in with those who have the signal and ask a minimal amount of questions to get a picture of what's going on. I'm on vacation. I could ask for the averages, right? Like today where the Dow shed 184 points, S&P dipped.32%, NASDAQ down6%. But that's not what I did yesterday. Not when I'm on the road. I need more context. I'm going to show you how to get it. You need to know it. As someone who was on the road for four years at Goldman Sachs, I learned early on that the average don't always tell the story. So, when I called in, I had a routine to find out the most I could in the least amount of time. At the same time, don't forget this. I'm on vacation, so I got to keep it quick. That's why any given time, I always have three questions in my head that can give me the context that I need to figure out if I need to take action. Maybe you should have a couple questions. First question, where are the bonds? She must never forget that as important as stocks are, the bond market is much larger and it rules the roost. If interest rates are going lower, you likely have a robust stock market. If rates are going higher, probably a bad one. These days, we have a new Fed chair, right? Got Kevin Marsh, and he's a smart guy. He doesn't want to make mistakes. So, he's trying to figure things out. I think he's taking a very professional approach. And I mean that as a compliment. This is a divisive time for America. It's good to have a professional run or central bank. However, I think worse can be right now opaque. I hope he doesn't go the way of his predecessor who apparently shared opinions with one reporter working for one paper. That made no sense to me. Nor did it make sense to have a press conference where the same people asked variations of the same questions each time. I think they often tried to make the Fed chief look bad, show disrespect to the institution. Also mystifies me why all these Fed governors and presidents are constantly yapping, offering themselves up to the media. I mean, like they're the Fed chief themselves. What the heck is that all about? I've said for years that when you're on the Federal Open Market Committee, you should keep your darn mouth shut about monetary policy. Let the institution do the communicating. Otherwise, you end up misleading people. Wsh is different, though. I think he gets that. I think he's taking his cue from the bond market just like I did when I was fishing for tarpon. Long rates went up when I was away. I was taught that if rates were going up, they'll tell the Fed chief what to do. I think Worsher is from that same school. He knows that if long rates keep rising, he's going to have to tighten. And if he starts to tighten, then you, me, us will have to get more cautious. I'll do that for my charitable trust. You can follow that along by joining our investing club. If you buy stocks at that point, you'll be fighting the Fed. And you don't want to fight the Fed because that is a losing battle. Right now, long rates are at a precarious level. 30-year Treasury yielding 5.24%. Very high. Highest level in 19 years. H 5.24. Also, doesn't that sound like a pretty good rate for a saver? Real competitor to risky stocks. More important, when the yield in the 30-year gets this high, it's basically screaming that war should have tightened as the last Fed meeting. I think he's working to figure out how the economy is going to be judged. But the bond market knows more than he does. And right now, the bond market says the Fed needs to tighten. That's negative. But there's always a possible explanation for rates going up. Which brings me to the second question I asked. Where's oil? Now, that might be driving rates higher and it might be where it wores out, right? Sure enough, oil was higher, seemingly breaking out once again. And that means Iran has the upper hand. Iran's desperate to keep its status as the gatekeeper of the straight of moves and we haven't been able to stop him. Higher oil would normally mean that President Trump will have to bomb rattle. That's the modern equivalent I think of saber rattle. Again, we have a negative input. Maybe that gives war some wiggle room though. But it will also cause the stock market to go down over the short term because higher oil is by nature inflationary. And again, oil's still well off its high. So this couple of dollar move up alone maybe shouldn't freak us out especially because oil seems a lot less dependent on this trade than it was a few months ago. Nevertheless, it is discouraging. The war with Iran is a daily on again offagain binary problem and right now the problem is leading to a negative conclusion. Hard for this market to mount an advance with oil this high. That's why I asked the question. Now the last question, can you guess it? How's Nvidia? How's the stock of Nvidia doing? I asked that for a host of reasons. Not just because it's the largest company on earth. I asked it because it's a huge percent of the market is now dependent upon the fortunes of Nvidia, the fortunes of AI, the fortunes of the data center. Nvidia was unchanged when I called and that's okay. Status quo. Let me tell you how large Nvidia looms. Yesterday, Nvidia helped put together what amounts to a coalition of big asset managers in Goldman Sachs that might securitize the wonder of compute. That term didn't even exist a few years ago. That's now the currency of the realm. I'll detail what I think is really going on. is a tad gauzy for my taste later in the show. Uh but the news came out after the close. I don't think people realize how important this data center theme has become. Sure, all of the magnificent sevens for tied the data center. But each day we find companies that have data center exposure that we didn't know. I mean today one that was just struck me. It's a Philadelphia owner the food services company REPORT AN EXCELLENT QUARTER. One of the reasons they're providing hospitality solutions to the data center including Texas. Now, that's just a plain vanilla company figured out how to create wealth by being affiliated with the data center, being affiliated with Nvidia. Or take tonight, we have Cisco, not the networking company, which is all in the data center anyway. But the food service company, which says that artificial intelligence made them more nimble, more responsive to customers, more profitable. You may or may not believe it. Maybe you think it is, I don't know, AI washing. But Cisco clearly believes it. Maybe that's what matters, though. It look, Nvidia has become the barometer for what might be as much as a third, some would say a half of the economy. I'm not kidding. We often think that there has to be a top brewing in the data center concept. I I still don't see it. Maybe core can influence Nvidia tomorrow as it did report on an amazing quarter tonight and send the stock up and then I'd have to rethink all my thinking. Well, not really. I'm just talking about shortorthhand. See, I can't ask about the CPI like we have tomorrow. I can't say, "Okay, how's Amazon? How's Apple? What's going on with Alphabet?" No one's going to listen to that, Lindy. I would say if Nvidia is doing fine, then the day is okay and I can forget about it and go back to fishing and we have some other forms of leadership. The financials are acting better. Healthcare is more positive. But the bottom line, my three questions tell me what I need to know, which is that yesterday it was just fine and dandy to go back to fishing for tarpon. And that's exactly what I did. Let's go to Jeff in California. Jeff, >> hey Kramer, I'm wondering if Palunteer might be the greatest stock ever in AI history. It keeps going up and up and up. It exploded the last five days. Jim, get this. It popped up 44.1% in less than a week. 44% in less than a week. Jim, they have no competition. Zero competition. They reported the revenue of 94 billion dollar which is a nine I'm sorry uh 1.9 1.9 billion 94 billion 1.9 >> is this Alex is this Alex in California I mean Alex Karp Jeff I got to tell you I the litany is true I have been saying that Palanteer remember I was the guy was on the hook for the 200 going to 250 but they're making me proud and are they my buddy pal friends probably not I don't hang in the same circles I didn't see them fishing off of Venezuelan Well, with me, I will say they had a great quarter and they deserve a little bit more. They deserve some of the love that Jeff in California is giving them. Alex, congratulations. You won't hear that very often from me. Let's go to Jerry in Missouri. Jerry, >> hey Jim, thanks for taking my call. >> Oh, I'm glad you called, Jerry. How can I help you? >> Jim, should I sell my position in the stock and buy more Intel in Micron or just keep my shares of Reddit? >> You know, it's funny. I'm glad you asked me that. I went over that Reddit quarter many times. I didn't think there was anything to dislike about it, but I think Intel demonstrated its strength by doing a huge deal at 95 and then having the stock go up $2.71 after. The answer is Intel and Bye-Bye Bonds, oil, and Nvidia. Those are the three things you need to pay attention to in this market. At least if you're short on time, but maybe long on money. Mad Money Tonight with food safety top of mind for the country. I'm sitting down with restaurant distributor Cisco at its earnings to discuss lettuce acquisitions more. Then if you want to invest in burgers, you have plenty of of options. But which company should you bite into? I'm giving you my assessment of the burger wars and HVAC distributor Fergus did a lot more than that too. Just reported earnings. So is this the company still benefiting from the data center buildout as well as the commercial and uh industrial renaissance in this country? on finding out with the CEO. So stick with Kramer. Don't miss a second of MadMoney. Follow Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743cnbc. Miss something? Head to madmoney.cnbc.com. cnbc.com. Last week, we got a solid quarter from Cisco. I always have to say this. That's the Cisco with a Y. That's the food distributor. They posted a slight top and bottom line. Beat management gave a very bullish forecast for 2027 fiscal year, the 12 months ending next July. Strangely, I thought the stock actually sold off 2.6% 6% last Tuesday in response. But since that has made it all up to the back, it didn't make any sense to me. The way I see it, though, you're now getting a pretty darn good quarter for free. Plus, don't forget Cisco's in the process of acquiring JRO Restaurant Depot. It's a cash and carry wholesaler for restaurants and catering companies that I love when I own my in. When that deal closes, they'll have a hammer lock on the entire industry. So, let's check in with Kevin Hurricane. He's the chair and CEO of Cisco Corporation. You get a better sense of the quarter and where things are headed. Mr. Welcome back to Man Buddy. >> Jim, thanks for having us on your show. It's good to be back with you today. >> And I am glad you're here. I've got to tell you, Kevin, you've accomplished something that I think very few people have been able to do. You've taken an industry that a lot of people feel doesn't have a lot of growth. You've managed to grow year after year and you've done it in a way that's very profitable. So, I think maybe you can just tell people why it's a good business that you're in. >> Sure. Yeah, great question. Let me just start as you mentioned in your brief intro the the quarter that we just posted. So we're pleased that we had a beat on the top and the bottom line and as you mentioned even more bullish about the year ahead where we guided our year this is on a 53-week basis a 9 to 11% earnings per share growth and even if you back out the 53rd week that is at the very high end of our long-term guidance. So, we're excited about the year ahead. The momentum of the business carrying into the year ahead gives us the the confidence. And to the business that you just mentioned first, it's a really large total addressable market, $370 billion total addressable market. We Cisco are the largest. We have 18% share, which means, you know, we ourselves have a tremendous opportunity to increase share profitably. That's with national restaurants. It's with local restaurants. It's with large hotels and hospitals and entertainment venues and of course international. Last comment about you know the most recent quarter. We just posted our 11th consecutive quarter of doubledigit profit growth in international. So the success that you referenced is happening on the global scale. Just two more quick things. We announced on our earnings call an AI transformation of our business model Jim. We're we're committing to in this year fiscal 2027 which we've now are started $und00 million of operating margin expansion tied to doing our work more efficiently while simultaneously improving the customer experience. And as you mentioned, Restaurant Depot, we're continuing the planning efforts. Uh looking forward to the opportunity to close that deal in the first calendar quarter of 2027. Jim, back to you. >> Okay. I can't wait to close that. I know both companies would be together be really better than separate. I'm wondering if I were a uh a Jeepro customer whether whether I could say to you, listen, I'm also a Cisco customer. Will you put stuff on the truck that is only when you're complete? Not not yet. Will you be able to do stuff c you know crosschain Cisco to restaurant depot or is there they always going to be separate? >> No, we're excited. They are different channels to be crystal clear. They are different customers. So today there's a cash and carry customer. Think smaller restaurant, food truck, single restaurant owner with maybe 10 tables. Uh they're doing the work themselves. They're driving to the store. They're doing the picking, the packing, the shipping, they're delivering it back to their own restaurant. On average, they're saving about 15 to 20%, Jim, by doing that. And that's a channel. The Cisco customer tends to be a little bit of a larger customer. They seek delivery. They want delivery. They want an in-person sales rep who knows their business, who helps them with things like menu optimization and culinary innovation. And they obviously pay for those services through the cost of the product. That's today. What we're excited about in the future is exactly what you just referenced. We can create the first nationwide and eventually international multi-channel operator within this space. I'll give examples to bring that to life. You could be a delivery primary customer who's getting two deliveries per week. that's to say Tuesday, Thursday, Saturday night you run out of salmon. Your next delivery is not for a few days. We can leverage that restaurant depot store who's oftent times closer to that restaurant for same day delivery um next day delivery or first thing in the morning and do it in a more cost-effective way from our warehouse that may be you know an hour or >> that is ter having been in it both in the restaurant and an inn. That's what I want. Okay. I don't have the time to get away from my outfit because then the place falls apart. Now, I do want to get before we go too far, there's something that a lot of people don't realize because people feel it's in it's inflation to go out. Food away from home continues to gain share, which is another great tailwind for you, but most people think it's gotten too expensive. They they feel people are staying at home, but maybe they're going out. No, the trend is rather obvious of how good this is for you. >> Yeah. One of the favorite charts I have is over the past 20 years, food away from homes share of wallet or share of spend and it's up and to the right and the grocery chart uh is the opposite. Uh and the the line intersected you know a few years ago. So every year food away from home takes greater spend and the white is convenience and it's also about experiences. Jim, you've been in the hospitality, you are in the hospitality business. It's about experiences bringing people together over food at a restaurant. It's something we enjoy. It's something that that Americans and around the world people enjoy. Europe in particular is following the exact same trend, but is about 10 years behind. So there's tailwinds. There's winds at the back at this food away from home segment that we're in. I just want to say one more thing about this combination of Restaurant Depot and Cisco. So I gave an example of a Cisco delivery customer who needs something. Now we can leverage that Restaurant Depot store. The opposite is also true. Restaurant depot does a great job serving the smaller customer. There are instances where those customers kind of grow out of doing the work themselves. They want a delivery partner. We can create a loyalty program. Think buy more, save more. As a customer, we'll reward you regardless of which format and which channel you buy in. Our goal is to bring affordable food to more communities. And we desire to bring that Restaurant Depot business model to 100 plus 125 specifically plus additional communities uh over the coming years. >> And one last thing, I know it's there by the grace of God. It's not my restaurant, but how do we try how can we at least try to have food safety after these incidents that we've been hearing about? How do we improve it? What can we do? >> Yeah, it's really unfortunate that we've got, you know, the two situations that are happening right now. Just want to say from a Cisco perspective, we take food safety incredibly seriously. It is our brand, quality of the food we sell, the safety of the food we sell. We have a very good, robust, strong food safety program. We actually executed a recall even before the supplier involved in this situation uh communicated uh the recall. We have a very robust communication protocol to our customers. Jim, we'll text you, we'll email you, we'll call you. We actually call five times to make sure we can get through to the customer to inform them of these types of events. U we've got great supplier partners in this space. They do good work. Uh it is a difficult epidemiology to try to trace and track back to root cause. just no interest like whenever it's found root cause actions are taken immediately. We shift source supply to alternative places. This is an example Jim where size and scale matter because we buy more fresh produce than anyone in the food away from home space. We can quickly pivot from who we buy from geography we buy from. The safety and quality is absolutely paramount and the trust within consumers and with the restaurant operators that we serve. >> Excellent. And then um for the your acquisitions, at what point will antitrust get in the way? I know we had that US food situation. I thought it would be a good combination, but I know that's not the way the government felt at the time, but are you when people just say, "Wait a second. These guys are too powerful. I need help." At what point could that occur? >> Yeah, the deal is in process of being reviewed as we expected. It has received a second request. Our expectation is the deal will close in our calendar, upcoming calendar Q1. So think, you know, that January through March time frame. What the government's going to see when they review the deal are the facts that we see. They're completely separate channels. We have a cash and carry customer who's choosing to go to the restaurant depot store to buy their product to save money. We have a delivery primary customer who wants delivery. So they're different channels. In fact, a judge has already ruled in a prior case that they are separate channels. The second point is our commitment. Cisco's commitment to keeping costs low. I've said before, we are not going to raise prices at restaurant depot locations. The entire purpose of this deal is to bring that phenomenal restaurant depot business model to hundreds of additional locations, which creates affordability and creates thousands of jobs. So, we're bringing affordable food to hundreds of additional communities, creating thousands of jobs. These are the facts that we believe the government will see when they do the review. And Jim, we're confident that the deal will get approved. >> Excellent. Thank you. I know that the numbers will go up when it happens and maybe the service will go up too. Although both app I have to say both established side views and both of them do a great job. I want to thank Kevin Hurricane who's the CEO and chair of Cisco. Kevin, it's great to have you on the show. Thank you so much. >> Thank you Jen. Have a great day. >> Okay, Money's back after the break. >> Coming up, has a victor emerged from America's decadesl long burger wars? Kramer is digging into the numbers to find out next. Last week, we heard from both McDonald's and Restaurant Brands International, the parent of Burger King. Apparently, Monarch is making a comeback because Burger King is running circles around the Golden Arches right now. McDonald's kicked things off last Tuesday morning, delivering a fairly tepid set of numbers. Their global same store sales were up 1.3% basically in line. US coms were only up a disappointing point8%. McDonald's saw its consolidated revenue rise 4% to $710 7.1 billion. That's a slight miss versus expectations. Their operating income was exactly in line too. Although they did manage a very modest 6cent earnings beat off a $3.32 basis. CEO Chris Kimchinsky blamed the company's US weakness on poor execution. He has kind of turned things around by improving the taste and quality of McDonald's food while overhauling their beverage platform, improving throughput, and coming up with new marketing. At least they know there's a problem and they're trying to fix it. I like that. That's why the stock actually rallied in response to the quarter. And I don't blame anyone for buying the stock because down here it trades at 21 times earnings, 2.7% yield. Stock's a lot cheaper than it used to be. Although from my perspective, it's become a a show me story. Unusual. We heard something very different though from Restaurant Brands International when it reported on Thursday morning. Now they posted 3.8% comps wide same store sales growth. Wall Street was only looking for three. Their total revenue was in line but their operating income was better than expected up 7% and they delivered a 3-cent earnings beat off a dollar4 basis. Now before I get to the good part Burger King the problem with restaurant brands is that it's a house of different chains besides Burger King. Sure, there is BK, but there's also Tim Hortons and Popeyes and Firehouse Subs. Now, some of these other brands are not doing that well. Tim Hortons, for example, I remember that was a great growth company. Mustard just.1% same store sales growth for the US and Canada when Wall Street was looking for 1.4%. Not that that's great. Popeyes was worse with US and Canada comps down 5.1%. We used to have them on all the time when they're independent. Used to be so consistently positive in its publicly traded days. Firehouse Subs, I don't know, disappointed the US and Canada. The company's fast segment uh last segment, I'm sorry, international catch all actually did pretty well. Same store sales up up 5.5% beating the 4.3% increase that the analysts expected. But that doesn't matter. Despite all that, it was Burger King that saved the story. It's on fire at 8.6% same store sales growth in the US and Canada, trouncing the 6.2% number that the analysts were looking for. And total adjusted operating income for the Burger King say was up double digits, up 13%. They are truly running rings around McDonald's right now. Ultimately, the weakness in the rest of restaurant brands, especially Tim Hortons and Popeyes, was enough to cancel out the strength of Burger King. That's why the stock tumbled 2% in response to the quarter. But in terms of burger chains, it is clear that McDonald's has been left in the dust. Must be driving them crazy. And Burger King just passed Wendy's this year, by the way, to regain the number two position by systemwide US sales. So, what is so strong about Burger King? What are they doing right? Well, I've been following the Burger King turnaround for a while now. Ever since executive chair Patrick Doyle, previously of Domino's Pizza, joined restaurant brands all the way back in November of 2022. Now, Burger King was one of the first things Doyle sought to fix and we are seeing the fruits of those efforts. In May, we had Burger King President Tom Curtis on the show and he explained what's starting to go right for the chain. I loved what he was doing. It was pretty terrific. Basically, he said the company was just listening to the customers. Well, there's a theory, huh? It led to menu improvements, including a revamp of the iconic Whopper, as well as store refreshes and an eye on value. Now, you can see that ethos in their new ad campaign. All right, they fired the Burger King mascot and declared, "There's a new king and it's you." Smart. We're all the Burger King now. Reminded me of when Doyle took over Domino's and they ran those ads about how their pizza was garbage. So, they were changing the recipe. By the way, I had new stuff at Domino's looking pretty good. That turnaround started in 2010 when the stock was around 10 bucks and by the time Doyle retired in 2018, it was trading at around $280. That's real money made. But to give you a better idea of why Burger King's winning while McDonald's seems stuck, I want to highlight some information from Rob Pace. He's at the 100x. That's an alternative data firm that directly asked consumers what they plan to buy and what they're going to buy more of, not less of. See, it's forward-looking. Pay said the net purchase intent for Burger King has been improving all year while the net purchase intent for McDonald's has languished. What's driving the change? Okay, according to Hunex, several business drivers have been moving in Burger King's favor this year. The biggest factor, taste, which has swung dramatically toward Burger King in a very positive way. And to a lesser extent, Burger King is also pulling away from McDonald's in drive-thru speed, price, and order accuracy. I still like taste being the best, though. And that's why they're putting up excellent same store sales growth while McDonald's says it hasn't been executing properly. Now, speaking of burgers, last week we learned that Starboard Value, one of the bestrun activist hedge funds, has taken a stake in Shake Shack. Now, this was right after Shake Shack reported a mixed quarter, not a terrible one, better than expected same store sales up 3.5% but weaker than expected revenue as well as 4% earnings beat off of 39 cent basis. And after that kind of just okay report, Starboard announced a big stake in the company. One worth several hundred million dollars. In fact, Starboard may now be Shake Shack's largest shareholder. It's a big bet. Jeff Smith, the CEO of Starboard, wants the company to add franchising here in the United States rather than just focusing on company owned stores. That announcement turned what was a negative reaction to the quarter into a very positive one. Stock getting last week, last Wednesday was up over 12%. Thank you, activist. Now, this certainly caught my attention. Shake Shack's been a real underperformer, sadly. Even after last week's run, it is still down almost 12% year-to date, but I have a lot of respect for Starboard, which has a ton of experience turning restaurants around. Starboard's work with Olive Garden parent garden over a decade ago is the stuff of legends. More recently, had a very successful campaign with Papa John starting in 2019. That's it. Even Starboard doesn't always succeed. They tried to turn around Bloomman Brands. That's the parent company of Outboard Steakhouse. out by Steos in a few years ago and and that's still a dog still. If anybody can breed new life in a Shake Shack, I think it's these guys. They got good ideas. So, where do I come down on the Burger Exchange? Okay, here's the deal. Here's the bottom line. I think McDonald's can still be owned even as it's become a show me story. If Burger King were an independent company, I'd be pounding the table on it. But unfortunately, it's bur within restaurant brands, which is struggling. I think Patrick can turn things around, especially now with the stock selling for 18 times forward earnings. could take a little bit. As for Shake Shack, this one's very expensive, but it's a lot more enticing than it was a week ago now that Starboard Value's gotten involved. Let's go to Mona in Illinois. Mona, >> hi Jim. How are you doing? >> I am doing well, Mona. How are you doing? >> I'm very well, thank you. So, my question today is about Netflix. I know you've been giving us a lot of advice about Netflix, but here is my situation. I sold a part of it in early 25 and then re-entered later in 25. So right now the stock is trading at 15% below my cost basis. So should I hold the stock for now and ride it out or should I buy more? >> Okay, but I've got strict rules in this. One is that we do not care where a stock has come from. We care it's going to. And second, has the price journey moldable come down or the earnings come down? Right now the earnings are okay. The price of the price Journeys Mobile is at 20. So call me a beginning position in Netflix. And for you, maybe you want to buy a little more to average down. Okay. I think Burger King is trickier to own because of its parent company. While Shake Shack, I don't know. Kind of tasty story, but McDonald's is still a burger stock you can sink your teeth into. Although I'm not going to tell you to run out and buy it. Much more man, including my Susan with plumbing and HVAC distributor Ferguson. Then has Nvidia's $500 billion deal created a new asset class for investors? I'm breaking down the potential of compute bonds and all your calls rapid fire in tonight's edition of the lightning round. So stay with crate. Yesterday morning we got an excellent quarter from Ferguson. That's the North American distributor of building products from heating, ventilation, air conditioning equipment to waterworks, plumbing, and fire protection. They report a better than expected quarter. raised their fullear forecast setting the stock up 3%. Okay, it gave back some gains today, but today was a little down day, right? I think this pullback is a gift. Ferguson's making big money from a lot of different sectors, data center, uh get a lot of business, semiconductor plants, power generation, pharmaceutical manufacturing biotechnology what infrastructure, any of these large capital projects allows them to make a lot of money. There's a reason they've been making lots of smaller, bold acquisitions to expand their market share. most importantly their core business commercial and residential construction. I'm calling it much better than expected. So let's take a closer look with Kevin Murphy's the president CEO of Ferguson to learn more. Mr. Murphy, welcome back to Mad Money. >> Jim, thank you for having me. Great to be with you again. >> Well, I've got to tell you, when I looked at your numbers, I was so worried. I said, "All right, I know that home is going to be bad. I know the commercial might save it." It didn't turn out that way. So, I've got to ask you about half your business is home. How is it better than expected given the fact that everyone's worried about interest rates and there's not a lot of housing turnover? I don't get it. >> Yeah, we were really pleased with our associates fantastic performance servicing our customers. You know, the growth and outperformance that we saw in both the residential space as well as the non-residential space was something we're really proud of. If you look at the residential side, you're right, interest rate pressure, general affordability concerns, new construction, still a challenging side of the market. But where we were investing, where we were focused on growing our HVAC business in particular, expanding that location base, growing through M&A, growing through organic means, and making sure that we're investing in talented associates to have 11% growth in what is a market that's more repair versus equipment replacement today. We're really pleased with that. Well, talk to us about people see your beautiful showrooms. I see your gorgeous showroom in Southampton in Long Island. It's just incredible. And I say to myself, wait a second. Home Depot's got that and Ferguson's got that. Why are people going to Ferguson so much? What's happened? What's changed? The arc of your success is really pretty amazing. >> Yeah, the Ferguson Home business, Jim, really does cater to that customer who wants a project experience. We couple an online experience through Ferguson Home on the digital side with what we believe is a best-in-class consultative experience inside of our luxurious showrooms. And so many of our showrooms, the vast majority actually start their journey online through our project tool and then they come in and they've got a one-on-one consultation with one of our talented and expert showroom consultants who really caters to the design expertise and the style preference that they have. And then most importantly, we want to project manage that through whether it's simply a bathroom renovation or a whole home construction. >> Well, I've got to tell you, I think that that's just a terrific model. I do need to talk about this large capital project, multi-year runway. I know people are going to say, "Well, that's why I should own it." I want people to own it for both pieces. Okay? frankly because I I like the fact that you have that 50/50 mixture, but I am drawn by what you're doing in the $6 trillion projected spending commercial market. Give it to us. >> Yeah, the the balance does serve us well. It makes us more resilient. But if you look at where today's tailwinds are, they really are in that large capital construction project area of non-residential data center construction. Yeah, that's the majority of it, but it's more than that. It's power generation, water wastewater infrastructure, pharmaceutical and biotechnology, chip production, general onshoring and manufacturing. And that's been a great tailwind because we're involved in not only the water wastewater that leads up to the site, but the commercial mechanical piping systems that run cooling to chips, the industrial pipe valve and fittings that power that overall production facility, and then ultimately the fire suppression that takes care of protecting that asset. And so that's been a great tailwind. We see that as a multi-year tailwind. And in fact, if you look at our commercial mechanical business, up 15% in the quarter on a 20% comp. Our industrial business up 18% in the quarter on a 6% comp. These are good performance in what is a durable tailwind on the non-residential side of our business. Well, could you I think you I one of the things that just shocks me is I I was saying if let's say I had to build a data center and it wasn't necessarily my core business, which is the case in a lot of a lot of different situations. I would be styied by the fact that there 5,700 liquid cooling assemblies, 57,000 valves and 12 miles of copper pipe in a data center. Who the heck would know how to do that other than Ferguson? >> Yeah. And that's only one project. And what's really important about that is because we're having pressure on the trade professionals in terms of what that labor force is that does the installation and builds these facilities. We're helping them in areas like virtual design centers to do the digital twin to make sure that we're doing the fabrication of the piping systems and delivering it from a modular construction perspective on site. So our goal is to make sure that we aid in construction productivity while at the same time making sure that in a supply chain pressured world that we can deliver on tight project timelines that are so important in these projects. >> I want to go back to a term you used just now digital twin. Jensen Wong at Nvidia showed us the initial ideas for digital twin and he told me that it's the change orders that cost they things jump a third in cost. If you can eliminate the change orders before the building, then you'd save a lot of money. Are you doing that for some of these giant customers? >> Yeah. Years ago, we really invested in early engagement on these projects with hyperscalers, with owners, with general contractors to make sure that we could solve their supply chain problems. But in addition with our specialized contractors, our mechanical contractors, we're augmenting their labor force while making sure that we have modelers and that we're ready to aid engage in virt virtual design with these customers to make that project go more smoothly. So yeah, that's part of what the service offering is. And it's not on every job, but it's certainly out there for our customers to utilize. >> You know, as a last question, I have to tell you, Kevin, when I was doing my work for this, I said, boy, maybe we just focus too much on the Federal Reserve. If you want to, you can really make businesses and be a little more in control of your destiny than a lot of people at home may think. But how do you have the confidence that it's going to be like that? Because you sure got it. >> Yeah, we we want to make sure that again on the residential side and non-residential side. Are we adding construction productivity? We think this trade starved world where we need to add more trade professionals into the labor force. We're going to make sure that they can get their project done on time and on budget. And if we can make our contractor customer more successful, the plumber, the HVAC technician, the mechanical contractor, the utility contractor, the fire suppression contractor, if we can make their business better, we're going to gain share and we're going to provide good margin. >> All right. I also want to congratulate you and I think it is worth congratulations because it is a very big deal joining the S&P 500. You got to be thrilled. Yeah, we are thrilled. It really is a great recognition for the impact that our associates make on the construction and the maintenance of America. And so for us, it was also a great capstone to a journey that really had us coming as a Footsie 100 on the London Stock Exchange and moving the business back home to America, headquartered in America, traded on the New York Stock Exchange, and now part of the S&P 500. It was a big day for us. >> Nobody can say it better than you, Ken. Kevin Murphy, president CEO of Ferguson FERG. Hey, maybe it's the way to play America. Thank you, Kevin. >> Thank you, Jim. Great to be with you. >> Money's back after the break. >> Coming up, he's the fastest mind on Wall Street, so we're putting him to the test with your help. Bring on the lightning round next. It's time. It's over the light center. Bye bye bye bye bye bye bye bye bye bye bye bye my step and then the lightning round is over. Are you ready ski d? Let's start with Walter in New Jersey. Walter. >> Oh Jim. Booyah. JM calling for me. >> State with the best tomatoes and the best corn. >> You bet. I totally agree with that 100%. Jersey tomatoes. Best there is. What's going on? >> My question to you is Stellantis. I owned it. I bought it about two years ago strictly for the yield. It's done nothing but go down and down. I think they missed on the last reporting and missed on everything. It's down 8%. Uh my question is three-fold. Is the stock cheap here? How and and as the is the dividend safe if it hasn't already been suspended and what's your long-term outlook on it? >> Okay, you got to step up from that bad corn to silver queen corn. You know what that means? You got to go into General Motors. I don't even think of Stalantis as being investable right now, but GM. Wow. Make the move. Make it tomorrow. Silver Queen. Let's go to That's the name of the Jersey and also Pennsylvania. Let's go to Sher in Illinois. Sherry. >> Booya. Jim, I lost. >> Oh, thank you, Sher. What's going on? >> Thank you. I was wondering what you're standing on Hinge House right now. Buyer hold. >> Oh, man. That's a strong but WHAT A QUARTER. WHAT A quarter they had. And you know what? I've been going over with Ben Sto. He's my research director. We were saying, "Hey, listen. What's the hell? How could that be so good?" And the answer is that quarter was a monster. Let's go to Michael in Arizona. Michael, >> hello Jim. Thanks for taking my call. Uh last Friday, I made a purchase of the largest producer and exporter of liquid natural gas. They've got a great infrastructure, strong cash generation. Their guidance was just recently raised. They're increasing production. They've got long-term contracts that provide stability and it's some buybacks that they're the negatives though they don't make money. They're approximately 25 billion in debt. They're very capital intensive. So they're continued expansion requires a lot of capital and they have uh and they're concerned >> what's the stock and international demand. >> Okay, that's terrific. What's the stock? >> Janeer. >> Jane. >> Shaneer. Oh, the LG kind. Uh why don't you sell why don't you do why don't you go by the suitc peon which is a sher energy partners that has a lot of the good qualities that you want that's the switch you make it tomorrow let's go to Reed in Texas Reed >> hey Kramer thanks for taking my call >> no problemmo what's going on >> yeah I'm curious about a stock that's been down but looks to be coming back do you think I should start a position in tractor supply >> look I have no idea why that stock came down to 18 times earnings and just people must describe it as a housing play it's not and I just think that it's probably time to start a position. Don't go too big at once because the quarters have not been that good. And that, ladies and gentlemen, conclusion of the LIGHTNING ROUND. The lightning round is sponsored by Charles Schwab. Coming up, could a compute bond really become a thing? Kramer's weighing in on whether they'd be worth the paper they're printed on next. There are very few benefits to being old. When I went to Trinidad to fish for tarpon this won't get a weekend, took me forever just to scroll down to 1955 with the Trinidad entry visa of my birth year. But the past has value. Like my time spent at Goldman Sachs in the 1980s, long ago. One thing I recall from my stay at the August Investment Bank was a presentation 1985 about autocurization. Back then, Goldman decided incredibly novel to bundle auto loans into bonds, then sell them to wealthy individuals and institutions. I was one of the first to hear the presentation and all hands don't debt meeting. I was skeptical talking about how quickly autos depreciate, how there are plenty of defaults on auto loans, how the repo man could destroy the bonds. Call me a skeptic, but I was wrong. I ended up selling the heck out of them. Well, those were the days of blind faith where blind faith was rewarded for both the client and the firm because they ended up offering a nicer yield than treasuries without a lot of risk and everyone was happy, both the client and buyer and the people at Goldman Sachs, especially me. Today, we're learning about the possibility of institutions offering compute bonds. This time, trading compute, that's a data center asset class, not unlike those securizations in auto loans. There's Jensen Wong, CEO of Nvidia, talking about the viability of the data center, long lasting value of the chips in these warehouses full of servers. Then you had a series of titans of finance talk about how logical the whole thing is. Then David Solomon, the CEO of Goldman Sachs, piped up and pushed them too. What you didn't hear, or at least I didn't hear until I digested it, was that these would be securizations just like securities backed by home loans or auto loans. Hence the strong endorsement of Goldman's David Solomon who can see the logic just like the logic of autoloan back securities when I was at Goldman. There'll be people who get it right away because they work for institutions that are always trying to get a good return with as little as risk as possible. Believe me, there would be no notes backed by home loans or auto loans if investors didn't want a little risk. Very easy to get a solid return with no risk via US treasuries which are backed by the full faith and credit of the US government. Believe it or not, that's still worth something. Now, you may be wondering, will these pieces of paper be backed by the full faith and credit of Jensen Juan and Nvidia? That's very funny, but no. But neither are the securities based on auto loans or home loans. There's a construct at work here, though. There's a belief that the assets don't depreciate quickly, if at all. So, the paper will be money good, which is how you must always think about paper. That's slang for fixed income securities like bonds. I can tell you I'm a believer. The Nvidia chips that are at the core of the data center haven't shown much depreciation at all. Core will tell you that tomorrow. Older models have held up better than cars which are worth less than the mo the moment they leave the lot right now. I'm not sure who will buy these originally at least. Maybe Larry's firm Black Rockck biggest asset gather biggest they have the most assets under one roof in the world. They've been de very deaf at developing infrastructure bonds. Maybe they'll offer data center bonds. Maybe David Solomon at Goldman will go to his private wealth management people and tell them to sell this paper just like Goldman did with autoback bonds when I was there. Judging by the success the firm had with the auto loan back bonds, I I think you should try it. I encourage it. There'll be skept I encourage it because my chest owns it. There'll be skeptics who say these things aren't worth it much at all because they think that this stuff is going to rapidly depreciate. Remember how mortgage back bonds help blow up the economy during the Great Recession, but man, the institutions that have backed by many a data center would love to have a two-way market in the data centers as a whole. I don't know if that's how it'll go, but it sure seems likely. At the beginning, it wouldn't shock me if Nvidia itself took down bonds by the tens of millions, augmenting their cash program while demonstrating their fidelity. I know that's what I do. If there are losses, Nvidia would absorb them. But then again, I don't think there will be. Instead, I think Jensen Wong and his Confederates have invented a whole new asset class like gold, like real estate, like home loans, like auto loans. Oh, and let me just say one thing. I think it's brilliant. I believe these notes will entice people who want a little extra yield. And there are a lot of money managers who love to chase yield, whether you think that's a good idea or not. And if I were back at Goldman, I bet I would once again sell the heck out of them because it's a good investment and naturally also good for the firm. I like to say there's always a bull market. I promise try to find just for you right here on Man Monday. I'm Drew Kramer. I'll see you tomorrow. >> All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full MadMoney disclaimer, please visit cnbc.com/madmoney disclaimer.