Saw that tweet this morning at 4 30 on the day where the dow gained 30 points and nasdaq advanced. 15 . And its always been like this. And the tweeter came back, so investing in stocks is betting on the fed . Is that why small investors always get in at the top . In other words, this guy just doesnt think the move is right. I think that the word right has to be the most expensive word in the english language. This is not an ethics class, people. Its not an exercise in some bizarre form of justice. Its not right or wrong what seems obvious to me appears incomprehensible to others. I sound like someone who wants to get away with something, while those who think its not right somehow represent the true path of reason. How the heck did this happen . How could so many people feel like paulkingsley, who penned the tweet . I think its central to finding out the next leg of this market. It holds the key if stocks can rally higher from these elevated levels. And i know theyre elevated. So, first of all, there is no smell test. When you invest in stocks, youre trying to divine the direction the market will take. That requires lots of history, lots of pattern recognition and lots of homework. Some people like technicians often think that pattern recognition is all that matters. Others believe the whole exercise is wrong and they view stocks entirely as one asset class thats done well over time, so you need some exposure to it. But still others, myself included, like the pattern recognition and the quality of the asset class and believe if you find out the best of breed stocks and invest in them, then the class can be discovered and exploited for profit. Notice, nowhere within the trio of reasons to own stocks is a smell test. When youre betting on what youre betting on here, what youre betting on is when you invest during these bad news is good news moments, is the history leading up to when the economy flips into high gear and good news becomes actual good news. Every time weve ever been in this situation before, its been an explosive time for the market, and you had to invest during the bad news is good news phase in order to reap the biggest gains. In other words, you have to be early and you have to anticipate. If you wait for the market to smell good, as the tweeter i mentioned once, then youll likely miss a great deal of the move. Hey, thats how retail comes out. Too late. Now heres where a lot of judgment gets clouded. There are plenty of people who believe that the Federal Reserve is life support for the stock market, and when you take away that life support, what happens . The market dies. These people simply do not know the history of the market as encompassed by my constant admonitions by dont fight the fed, dont fight the tape. Theyre blinded by politics, thanks to the polarizing world, now affects even the process of trying to make money in stocks. I think its a totally false linkage. Those who avoided this rally because they believe that it is somehow politically incorrect, as the tweeter alluded to, missed out on making tons of money. I also think they dont care, though. Thats because these people are not really investors. Theyre politicians and polemicists masquerading as investors. Their views have to be avoided at all costs because they have nothing to do with the actual process of trying to make money. They act like this tweeter did, as if theyre protecting the small investor from people like me, and otherwise if theyre not careful and i keep doing what im doing, the investor will come in ultimately at the top. I say tons of small investors watch this show every day, and theyve been reaping some terrific gains. Lay off them. I read their tweets jimcramer. You can, youll see. Stop bad mouthing people trying to make money, because many of them are succeeding. They are laughing all the way to the bank. Second, those who think the stock market can never transition to an earnings derived advance dont understand the idea of sector rotation. When they say this market, theyre simply being brainwashed by trading the futures of the market, like that risk on, risk off stuff i was able to kill. Yeah. That is not investing. That risk on, risk off asset classes. Thats not investing. Thats rolling them. We dont roll them asset class choosing, its been dead wrong. The dominant asset class Success Story of my lifetime has been in the fixed income world, not stocks, the 30year Treasury Offering by far the best risk reward over the course of my career. Thats right. 30year treasury has been fabulous. You know the most enjoyable, predictable element of the market comes when the earnings arent manufactured by cost cuts, but are generated by higher sales overlaid on an organization with big shares taken out by stock buybacks. Thats where we are now. Were getting many signs that the International Companies based in the country are now experiencing the transition from earnings oriented investing, something bountiful, to sales oriented investing. When that occurs, the market can really gallop. There are plenty of people betting the fed will hold off on tapering. Those are what i call the clorox investors, still attracted to slight growth with some yield. There are so many hedge funds betting against the securities like clorox that theres this bizarre funnel effect of shorts covering, longs unwilling to sell because of gains and a nice dividend and outright share buybacks. There were 153 million shares of clorox a little more than five years ago. Now there are only about 132 million. That missing 21 million shares explains much of the move. Much more than people realize. Makes for hard short selling and easy owning. Now, it is true that we could lose clorox in the transition to higher earnings. Anyone who knows the history knows we should now be shifting to the banks, the bank, the financial part of the market is the largest, and the banks make up the large part of the financials. The money should come out of the nonbank financials as well as when the rest of the market flow into the banks. The government keeps them from doing so, but it could happen soon. These investors might be drawn to technology, especially now that the personal Computer Class of tech seems to have bottomed. At least we can see that from microsoft, western digital, seagate, hewlettpackard and intel. And they might be interested in retail, recognizing things can get better than they are right now if the economy improves. Only because of the possibility of more jobs, therefore more disposable income, and Sales Numbers out there than the ones we get to see because theyre with the big boxes typically and not the omni channels. The political types are citing the new health care regime as a reason to sell stocks. That might prove to be wrong. The Large Companies are precisely the ones that can navigate these new waters. Their smaller capitalization and Smaller Company rivals will fall by the wayside under this new health care system. That will soon be logical to everyone. And its seeing if the people in the white house had some business savvy, they, too, wouldve seen this coming. They didnt see it any more than they saw the website issues. So to sum up, the smell test does get vindicated backhandedly by a transition that historically occurred in the cycle. The investing that has come before this moment is from people who recognize that bad news has historically led to good news and theyve been driven by individual Stock Performance as well as pattern recognition. The asset class hunters and corporate buybacks have been convenient props to the whole process, which is why this moves so explosive. The rally that shouldnt be happening is, indeed, prevailing. I feel badly for people who want to wait for the smell to improve. They might be confused by politics in the media, politically driven need to have a balanced debate between bulls and bears. Wow, the bulls and the bears are going at it again. But in the end, these are people who convince themselves they were right, and doing so, they were perfectly willing to forego the incredible gains to date. And i think theyll most likely forego the next set of gains too. Theyve been brainwashed into thinking its all phony. Heres the bottom line, though. A combination of blindness instilled by the inability to believe that stocks can really rally under president obama, coupled with an underestimation of the Federal Reserves will, historical buyers who are not now going to turn sellers because they know the history and fear of stock shortage among seasoned equities, could end propelling us to the next level. Believe me, to these purists, the next move, itll stink to high heaven too. Can i go to gerard in South Carolina . Gerard . Come on, this is the real usc. Caller hi, jim. How are you, gerard . Caller im well, thank you, sir. About a month ago, a caller asked about noodles, you had recommended to hold it. I have a fairly large position. I am down about 11 . Friday when the market was up, the stock tumbled 6 . My question to you is this, jim. They are coming out with a new offering at a cost of 39. 50. Now, my cost basis is higher than that, and i was wondering going forward, generally speaking, when you see this happening within a stock that you own at the repurchase new offering price will be less than what your cost basis is, is that a sign to sell . I didnt think they should have done that deal. The stock had been down because of the big colorado flood. 39. 50, you know, to me come you come underneath that now, you get a better basis. Stock goes back to 41, sell a little, but you have to buy some here. You cannot sell it here, gerard, and they shouldnt have done that secondary. I wish they had not done that, but they did it. And it was negative for shareholders. Bill in missouri, bill . Bill . Caller yeah. Hi, jim, how are you doing . Real good, bill, how about you . Caller im doing great. Okay. My question for you is i noticed recently that autozone had been downgraded, and i own quite a few shares of oreilly automotive. Im wondering if i should be concerned about it. Do you think thatll affect no, i like oreilly more. But remember, autozone reports tomorrow, and the pattern has been autozone gets completely hit right after they report and then you have to buy, buy, buy so dont worry about oreillys really good. The roses, they you can stop and smell them. If you wait until the market smells right, though, you might miss the big move. And thats just one of the truths of investing. But well get through it together. Stay with cramer. Coming up fashionable financials . Tommy hilfiger, calvin klein, izod, van heusen and speedo, the bevy of brands from pvh given an unprecedented look at the consumer. The earnings are out and cramers got first crack to hear what these numbers may mean for the Holiday Season ahead. And later, Neighborhood Watch . Housing is back. And thats meant boom times for many of the brands you find around your home. But does the rebound in real estate make these household names a buy, or has the comeback opened another door to invest . Plus instant gratification . Do you swipe for points, money or miles . Millions of consumers use reward programs when they fill up, fly or grab the latest fashion. And Alliance Data is behind the transaction. Can the stock still provide a bonus after its rally this year . Find out in cramers exclusive. All coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question, tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Weve been in a really choppy moment for retail, especially apparel. So how is pv, company you know as calvin klein, Tommy Hilfiger, izod and arrow, holding up in this environment . King of the dress shirts in Department Stores all over north america. Back in february, pvh bought warnaco, bringing Calvin Klein Jeans and underwear back under the same umbrella as the rest of the brand. Pvh just reported at the close. And while the revenues came in a bit light, they delivered a 5cent earnings beat. Management maintained guidance rather that raising it. Maybe theyre trying to be conservative. Lets take a closer look, hear more about the quarter and where the companys headed. Manny, welcome back to mad money. Nice to see you again, jim. Are these the Calvin Klein Jeans were worried about . Yeah. Are these the ones we want to see because you are abject in the Conference Call in the statement that youre unhappy with Calvin Klein Jeans in the sales. Yeah, that business has been under pressure from before we acquired the company. Weve been pretty consistent. We talked about the second half of 2014 where we really think well start to see the turnaround associated with the cleanup of Sales Distribution and also really focusing on new product. You use these do you use the two terms im getting used to and dont want to be. Very competitive and highly promotional. That to me says, i understand why the stocks trading down in after hours. Manny is saying, manny who is so confident is saying, look, this is not that kind of Holiday Season. Well, look, its weve gotten off to a reasonably good start in november, but the environment is very promotional right now. Thats what were seeing pretty consistently at the mall level, Department Stores, also in our own retail stores. So were taking right now a cautious look as we look into the fourth quarter. Well watch the next three or four weeks, and i think were in as good a position as anyone to outperform. But right now, were being cautious. Well, i feel like ive got to divide between a business thats really on fire, which is Tommy Hilfiger, and a business that i think you still sound unhappy with, which is this acquisition. If i look at Tommy Hilfiger and look at legacy, you have to be thrilled its hanging in there so well. Well, i think so. Based on the performance we had yeartodate, weve had a terrific year. And the big outperformance of the Third Quarter was the calvin klein business. We have a problem in jeans. Right. Jeans is a big business, but the calvin klein brand is an 8 billion business, jeans is about, you know, 15 of that. Clearly the other 85 is putting up big increases across the board. This surprised me. You talk about having youre not happy with the quality and the design of the jeans. Cant you just get new people . You often you also say youre trying to fill a significant number of open positions. Whats happening . Well, look, when we acquired the business, we talked about it, the need to invest in the business, both from a Product Point of view, design point of view, a sourcing point of view. We thought the business was not run appropriately, particularly at the jeans level for calvin klein. Were making those weve made those changes. Everybody would like it to happen overnight, but i think you understand, youve been in the business lead times in this business are eight to nine months out. So we think well have an impact on spring 14. But we really think the big impact will be for fall 14. Plus, presentation at retail. We really need to make those investments, and thats what were in the process of doing. Well, help us through the idea that somethings promotional. Well, why cant macys be promoting your stuff and that comes right to your bottom line. Why is promotion necessarily bad for the guy who is being promoted . Well, i think a promotion overall is the question of the average unit retail out the door. What were talking about is the goods are moving, we cant have any kind of inventory problem. Weve had a strong Third Quarter, what were talking about is how promotional is the Holiday Season going to be . How much support do we have to give to our Retail Partners . What kind of markdown rates will we have in our own stores . The initial indications with this tighter Holiday Season, less calendar days, it just feels like its going to be coming later and later at this point. How about this november jc penney number up 10 . Jc penney, previous guys became real good partners with you. Theyre using legacy. Thats been good, right . Very strong for us. The izod business continues to be very strong. And what we really saw is i think ive been on there a couple of times. Ive been critical about the lack of classification inventory product like dress shirts and basic sportswear. What jc penney is known for. Those inventories really got back in line in the Third Quarter. And you started to see that sell through improve in october, dramatically improve in november. And i believe those trends have continued as were going into december. Calvin klein europe jeans. How much the design and the quality, how much the fact that southern rim still not really turning for you, but northern pretty good. Yeah, i guess different from the tommy business where were 75 in northern central europe. The calvin business is really very much 75 to 80 southern European Business. Spain and italy continue to be challenged markets. And as weve talked about, our European Business overall in calvin klein is about a 500 billion business, and were breaking even in that business. Our tommy business, which is three times that size, earns close to 15 . Just to give you a sense of what we think the opportunity is for the brand and how were going. Its the investments that need to be made now in order to get that business right. But in saying all that, we still beat the quarter by 5 cents a share. I know, stocks down and im going to tell people, look, if its a 2014 story, and over and over again you say its a 2014 story, im not going to say its a 2013 story. Because that means im not listening to you. Im not even including what could go on in asia, which is downplayed because youre so forthright about whats not working and youre not that and youre totally humble about what is working. Asia seems to have worked. Yeah, particularly calvin klein, very strong jeans, underwear business and our sportswear businesses throughout asia. China in particular, and in southeast asia. Those are real growth areas for us as we go forward. Well, thats what i want to focus on. Give us more bright spots. I think the stock is going to come down. Another big bright spot for calvin klein continues to be latin america. And then anything in north america, with the exception of jeans. Our calvin business overall is up about 8 . Thats with our jeans business down double digits. Just to put that in perspective, our other businesses are womens businesses, sportswear businesses are up double digits. That trend continues, the business is coming together, the investments were making. People, product, we really think looking out second half of 14, 15, we really think they pay big dividends going forward. This is a story about taking a big acquisition, right sizing it, fixing it no regrets. No regrets at all. And it could be more in the same name plate. There is still some more calvin klein out there. Absolutely. Doubledigit growth in this calvin klein business going forward. Well, im a believer. Made me a believer before, im a believer now. Youll see the stock come off because it didnt do xyz. Think about next year. Think about it as you would any company that is in that is saying, look, next years going to be better, that has made you money year after year after year. And thats why you shouldnt be selling pvh, you should be buying. Stay with cramer. Coming up cramers got another read on retail ahead of the Holiday Season. Whether youre buying pumps or pumping gas, more consumers are hooked on rewards programs than ever. Find out if these benefits could provide you a bonus. And just ahead the rebound in housing has caused a rally in everything, including the kitchen sink. Is that where you should be looking next . All coming up on mad money. Who should you trust . One of the toughest things about the market is for any given stock, you can typically find very smart people on both sides. You have brilliant bulls, hyper intelligent bears, all saying contradictory things about the same exact company. Take today, just this morning, Goldman Sachs came out with a sprawling report on the Building Products plays. Totally highquality research where among other things they initiated coverage on masco, maker of paints, plumbing products, cabinets, installation. And two minutes later, Credit Suisse comes out with a little note reiterating the buy, buy, buy on the same stock. Its like chinatown. Sister, mother, sister whos right . The bears at goldman, smart. The bulls at Credit Suisse, all right, little spoiler alert here, everybody. My Charitable Trust owns masco, so guess what conclusion im going to reach. But, anyway, because youre always going to have to sort through conflicting opinions to decide whether or not to buy a stock, i want to go through the negative research by Goldman Sachs. It was very high quality, shows you why i think the bulls are right, i hope. First, though, a little background on this Company Called masco. One of the leading players in home Building Products with some iconic brands including delta faucets, craft made cabinets, bear paint, among many others. Masco is mostly a domestic player, 70 of the sales come from the United States, most of the remaining comes from europe. Small but not insignificant 4 yield and up 29 yeartodate, and thats not too shabby. If you think housing will stay strong, something thats totally believable after those terrific october new home Sales Numbers we got last week, then masco is an Excellent Way to play it. If toll says good things tomorrow, masco going higher. Why does Goldman Sachs say its a sell then . First of all, the goldman piece is not just about masco. Its a pastiche about the industry, about the whole Building Products cohort. And their main thrust is that nonresidential construction is really starting to heat up. You want to swap out of the residentially focused plays like masco and swap into names with a lot of nonresidential exposure like armstrong world, the flooring and ceiling play and mohawk industries, the flooring play, both of which spiked nicely today off this report. I think goldman makes a really compelling case for nonresidential construction. I agree with that. That doesnt necessarily mean you should sell things that are housing related. I think theyre wrong about that. Theyre wrong about masco. Meanwhile, the Credit Suisse note was to tell people they like masco. But the firms last report from the end of october made a bullish case for the stock. While the masco bears at goldman believe that housing will keep accelerating next year, they think it might not pick up until spring. Thats a gap. More important, they think mascos installation business, where they sell insulation, gutters, fireplaces, garage doors, roofing, they think that could be damaged because of the slowdown in housing over the summer, as there tends to be a one to twoquarter lag between when new homes are sold and when things like mascos insulation get installed. I totally get where goldmans coming from here. The fact is, this part of mascos business accounts for 16 , 16, of masco sales. The Company Actually gets 73 of its sales from the repair remodelling market, which should stay strong for a long time to come. Remember, the rise in home values means that people are much more likely to renovate. Homeowners who arent under water in their mortgages spend three times as much money on their houses as those who are under water. Thank you home depot for giving me that statistic. They do try to throw some cold water on it, saying the repair remodel activity is close to the historical average as a percentage of gross domestic product. I think thats the wrong way to look at it, mr. Goldman and mr. Sachs. As the job situation in this country gets better, so will the Home Improvement market. Home improvement spending is still 14 off the 2007 peak. Next up, goldman doesnt like how masco gets 40 of its sales from home depot and lowes. They think this concentration limits the companys margin expansion. Those are powerful vendors. Especially with the increasing consolidation in the space. You know what, i think thats slightly misguided. Masco has exclusive agreements with both companies, home depot and lowes, representing huge sales platforms. Theyre as crucial to driving revenue growth. Thats right. And might not be as limiting for the companys margins as goldman thinks. I like home depot and lowes said theyre seeing a pickup in kitchen and bath. Theyve indicated consumers are willing to pay up for Better Brands and Higher Quality products, which is also good news for masco. The bears at goldman think we could be disappointed by the margins of mascos cabinet business. They check these boxes off, and 30 of the sales and a lot of the growth come from the lower margin direct to builder market which is so nonlucrative, the competitor fortune brands, another stock we like, has gotten out of that Distribution Channel entirely in certain regions. I think its worth mentioning that mascos management has taken out 600 million in costs since 2006. The latter of which theyve restructured pretty dramatically. The companys margins are now on the rebound although theres room for improvement. Masco is guiding for 30 of incremental margins. But its been conservative since the housing bubble burst. I wouldnt be surprised if masco saw incremental margins in excess of 40 . With more on the way in 2014, on top of that Credit Suisse thinks they can boost margins by raising prices. And ive got to agree, i think theyve got Pricing Power even as goldman thinks it doesnt. Goldman says masco wont be able to return capital aggressively to shareholders because theyre still cleaning up the balance sheet. On the other hand, masco does have 1. 2 billion in cash right now, and they should generate 1. 5 billion in Free Cash Flow from 2013 to 2014. No, i dont expect massive buybacks any time soon, but i wouldnt be surprised to see masco returning loads of cash to shareholders. Got to buy now for then. During the last housing upcycle, they were shareholder friendly, bought back 43 of the float. Enough about masco the company, how about the stock . Goldman gives it a 20. 50 price target, 1 below where the stock is now. Ouch. They get there by assigning the company an enterprise multiple, the enterprise value, the market cap plus the debt, minus the cash, divided by the earnings before interest, taxes, depreciation, amortization of 9. 8. Credit suisse gives it a 25 price target. The stock still has plenty of room to run, if thats how you want to value it. Meanwhile, its trading at 19 times next years earnings, which is well below the five and tenyear averages and not too pricey considering it should be able to grow earnings at a 40 clip next year. The bears at goldman think its time to sell masco and swap into some nonresidential construction plays as that space starts to turn. I think theyre wrong. I think theyre wrong to write off masco and i agree with the bulls at Credit Suisse, believing this stock could have more room to run. I say stick with masco and stick with cramer. Lou in oregon, lou . Caller booyah, skedaddy. Im not booing, im louing. Caller hey, about six months ago, you recommended and i bought two stocks, American RealtyCapital Properties and also health care reit. Im wondering, should i by more . I would. Look, these are all about this group has been killed because of rates going higher. And when we get the tenyear at 3 , which i think its going to, thats when i want you to buy. Not until then. These stocks are under huge pressure because of the backup in treasury rates. I understand thats what it is. Its not because of the fundamentals, theyre good. 7 yield is always good to get. Two companies with competing when you have a stock with two views on it, okay, youve got to figure out which the one is the best. I know goldman doesnt like masco. Credit suisse likes masco. I think the bears are wrong. Tomorrow, kick off the trading day with squawk on the street live from post nine at the nyse. Not a lot of things, land mines. It all starts at 9 00 a. M. Eastern. [ male announcer ] heres a question for you where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Every weekend worked, every idea sold. You deserve a cadillac, the Fastest Growing fullline luxury brand in the United States. Including the all new 2014 cadillac cts, motor trends 2014 car of the year. Now during our seasons best event, get the best offers of the season on our Award Winning products, like the 2014 ats and srx. On our Award Winning products, so ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. It is time it is time for the lightning round on cramers mad money. Rapidfire calls, you say the name of the stock, i tell you whether to buy or sell. Are you ready, skedaddy . Its time for the lightning round on cramers mad money. David in california. David . Caller hey, jim, how you doing . Real good. How about you . I work for a Company Called wso, i wanted to know what the longterm would be. Oh, man, i love wadsco. This is like the quintessential american stock right now that is going to work and you also well, its the yield is not so great, not so much, but hvac, hvac is one of the strongest currents right now in the action. All right, lets go to lois in florida. Lois . Caller merry christmas, jim, to you and all my fellow cramericans. Thank you. Caller i bought in at 77 on biomarin when it was supposed to go up. Of course it hasnt. I remain a buy of biomarin as i do celgene, gilead, regeneron, steve . Caller booyah. My stock is fedex, fdx, what do you think about it . I prefer u. P. S. To fedex. But fedex is real good. Tom in connecticut, tom . Caller Insurance International group holdings, eigi. Do not know it. Do not know endurance. Do not know it. Lets go to john in new jersey, john . Caller mr. Jim cramer. Whats happening . Hit me. Caller dgo no, no, no, no sell, sell, sell you want a gold stock, youve got to go to rand gold. I prefer the gld, understand that gold is not going up right now, but we can stay long it as a hedge. Its a currency. Jay in new york, jay . Caller manhattan booyah. Nice. Brooklyn booyah back at you. Whats up . Caller guidance. I need some guidance on a stock you seem to like, sirius xm satellite. Analysts were lukewarm on that last quarter. It wasnt that big a miss. I think you should buy it. I like sirius. And i particularly like i like that guys running that company. I think theyre very good. You want to be long sirius satellite. And that, ladies and gentlemen, is the conclusion of the lightning round. The lightning round is sponsored by td ameritrade. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. wherever you are with the mobile trader app in a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. every day were working to and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. Pretty much everywhere you shop these days, they ask you if you want to join the Loyalty Program. These things have become crucial in modern retail. Giving retailers a new way to connect with customers. How can you play this loyalty card explosion . How about with Alliance Data systems, ads, the Company Behind a host of Customer Loyalty programs as well as datadriven Marketing Services and private label Retail Credit card programs like youll find in a lot of mallbased retailers. Ann taylor and victorias secret, among others. This stock has been on a tremendous run. Its up 70 for 2013. Up 254 over the last three years, talk about a stealth bull market. Companys latest quarter was terrific. And even up here, still only trades 24 times next years earnings. Lets check in with ed heffernan, learn more about his company and its prospects. Welcome to mad money. Thank you. Have a seat. Okay. I know two companies located in plano, and one is big and failing or at least looks failing, which is jc penney, and then theres another one, its yours and i was embarrassed to know ill admit, how little i really knew about how all of us have touched your company in one way or another without knowing. Right. Were pretty much behind the scenes. We put our clients first, and then were all the stuff making the watch work. Explain to me how you could have 100 million customers as varied as merck, ford, fedex, dell, procter, jp morgan. Are there commonalities of all of those that you do . Sure. And this is one of the big macro trends that are going on, is that more and more companies out there are looking to learn about their own customers, and in order to do so, one of the best tools out there is to put together a Loyalty Program. By having a Loyalty Program, im able to then understand what youre buying, when youre buying, how youre buying, what motivates you to buy, and our job is to then figure out what can excite you to come back one extra time this quarter, two extra times this year. And if i do my job right, the roi on those types of investments are huge. Whose ideas are you implementing or are you also coaching these clients . Its a combination of both. So youre talking about these massive, massive programs, everything from the city bank thank you network, Hilton Honors rewards, to a number of private label programs like victorias secret and ann taylor like you mentioned. Its a combination of us providing a platform and also providing the ability to extract that deep sku transactional information thats so important. Because of your panoply of retail and because you say in your most recent Conference Call that you are very optimistic of things, but youre doing twice as well as a lot of your competitors. Where do you feel right now about the Holiday Season . Actually, what we saw in the Holiday Season goes against a little bit of what youre seeing out there in the marketplace, what youre hearing about. What we actually saw for our clients was a pretty strong okay. Fiveday period. And, you know, which would suggest to me that this is going to be a pretty decent Holiday Season. Could that be because you also say you have omni channel, a relationship with paypal. You have a lot of the channels that are not talked about in the media. Right. And our clients, youre not talking about these huge big box retailers. Youre talking about retailers such as pottery barn, crate and barrel, ann taylor, victorias secret, names like that did quite well. Whether its bricks, whether its online, whether its through catalog. The multichannel approach actually looked quite strong over the holiday. I think you have a better handle on it than the media does. When i go online to check, what do you think they say . They say why doesnt he split the stock . Well, its a great question, and i guess its a little one of my pet peeves. We started, we went public in 01 at 12, and its been a pretty nice run up to 250 or so. But from my perspective, splitting the stock doesnt add incremental value. Its just basic old school and thats the way i am. But what does add incremental value is the slingshot. Strong growth in business combined with share count takedown. Right. Yeah. Were looking at our model is such that if you look at where the dollars are going in this industry of big data, digital marketing, all that stuff out there, were comfortable saying that we can grow organically our top line at approximately 3x gdp, and that combined with the fact that our share count is shrinking 10 going into next year, youre going to see an acceleration in eps. When i looked up epsilon, that seemed like the forerunner to facebook started by a bunch of kids at Harvard Business school trying to keep track of everything. Is that how it started . Well, it goes back a long, long time. Its not one of these things that popped out. But its now grown into a very, very large successful Digital Agency platform, loyalty platform, and most of the large Loyalty Programs are run by epsilon. You get fees from that and you have some credit. For your credit card, you have that great mix of fees and finance charges. Right. Our view is we have a number of platforms that appeal to different verticals. So specialty retail, jewelry, Home Furnishings would be more likely to have a private label card because of the liquidity factor, whereas a lot of the other verticals, Like Financial Services and pharma and places like that would prefer big Loyalty Program from epsilon. At the end of the day, i dont care. Right. And our goal is to extract the type of information that those clients need. So to your point earlier, we have information on roughly 230 million people, and we have a beautiful view into their behavior, which helps our clients immensely. Well, and i want to thank you. I wish i knew more about your company beforehand. You have a great business. This is great. Thank you very much. The president and ceo of Alliance Data systems. A. D. S. Look at this company, the website has everything, watch the videos too, youll understand it. Stay with cramer. Where is flo . Anybody know where flo is . Are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You tell us the price you want to pay, and we give you a range of options to choose from. Careful, though that kind of power can go to your head. That explains a lot. Yo, buddy i got this. Gimme one, gimme one, gimme one the power of the name your price tool. Only from progressive. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] fedex one rate. At the top of the show, i told you why stocks are going up. Today represents a textbook case of why so many go higher. It seems one off and you see the full mosaic and it becomes thematic. These two companies are emblematic of a huge undercurrent at the moment. Buying competitors to raise margins and gaing market share. White wave bought Earthbound Farm and the acquisition is immediately accretive. This line extension from whitewave, makes it much more valuable to shareholders. Positions them to become more like hain celestial and it reminds us how companies build up heft in their industries have more Bargaining Power with suppliers and vendors. No wonder it rallied 5 today at an alltime high. Sysco shows us the power of deals to move the needle in a spectacular fashion. This stocks been stuck in the low 30s for ages. Suddenly it burst out by buying closely held competitor u. S. Foods, including stock, its offering stock. Nearly 10 gain at one point today, a 30 gain at least in the Early Morning hours when the news broke. Thats remarkable. At another time, i would fear antitrust regulation, but not with this antitrust department, the one that blessed the American Airlines deal. It was a deal that started trading today and i think after some initial disposal of stock by debt holders and workers who dont know what to do with their stock winnings other than sell them, american will soar higher, too. Mergers are behind the strength of micron, gaining another 3. 5 today in part because it bought a failing japanese conglomerate which competed with them in the dram market. Thats allowed the companys dram business to maintain price, a lack of capacity for the second line of business, flash has kept pricing strong for that commodity, too. It has as both personal computers and cell phone sales have gotten a tad stronger here. An acquisition is behind the recent outperformance of linn energy, otherwise down market for oil and gas producers, linn is buying barry petroleum. And that deal will soon close allowing analysts to raise the numbers. And then theres celgene, revealing positive data on the blockbuster drug for multiple myeloma, that brings it still closer to being the first line treatment around the world. That puts the possibility of 17 of earnings power on the table as soon as perhaps 2015 which makes it an incredibly cheap stock even after the 2 run today. Finally theres the refiners, a group thats been down and out not that long ago as the price of u. S. Oil has come up so much that the refiners werent able to arbitrage the difference between cheap west texas crude and expensive brent. Refiners were able to buy crude, here or over there, refine it and sell the gasoline at the global price which is priced off of brent, the higher one. The u. S. Glut has brought down domestic oil prices, thats good for the refiners, they can coin money, the brent prices sell much higher and sell it at the gas station for the same price. You dont know the difference. The price theyre buying that crude is much lower. Emblematic of a discerning market. Oil stocks are headed down even as the refiners are headed higher. Thats just how it should be. Rational reasons for stock rallies. Just whats supposed to happen as we get the transition from a fedassisted stock market to one based on earnings. Stay with cramer. [ male announcer ] if we could see energy. What would we see . The billions of gallons of fuel that get us to work. Wed see all the electricity flowing through the devices that connect us and teach us. Wed see that almost 100 of medical plastics are made from oil and natural gas. And an industry that supports almost 10 million american jobs. Life takes energy. And no one applies more technology to produce American Energy and refine it more efficiently than exxonmobil. Because using energy responsibly has never been more important. Energy lives here. You know, ronny. Energy lives here. Folks who save hundreds of dollars by switching to geico sure are happy. And how happy are they jimmy . Id say happier than a bodybuilder directing traffic. He does look happy. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more on car insurance. Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. I like to say theres always a bull market somewhere, and i promise to try to find it just for you right here on mad money. Im jim cramer and ill see you tomorrow. Narrator in this episode of american greed, fenphen, the miracle weightloss drug of the 90s, turns out to have a serious side effect. For some of these patients, this was very scary. This was a death sentence for some of them. Narrator when the story breaks, ambulancechasing lawyers rush in, exploit tragedy, and pilfer their clients money. These lawyers were already going to legally be paid fees in the amount of 60 million, but that wasnt enough. So they took 126 million out of a 200 million settlement. They wanted their rollses. They wanted their planes. They wanth