Mad Money w/ Jim Cramer 10/12/26

Argan

• Jim Cramer · CNBCBullish

  Argan's power-plant position is strong, but its backlog drop and slow new awards are the key risk.

  Argan is an EPC builder with 78% of sales from power plants, about 80% of backlog from natural gas projects, and it sits in a data center-driven demand boom where few contractors can build power plants. Its latest quarter was strong: revenue up 62%, power up 53%, industrial more than doubled. But some revenue came early, and underperforming unrelated projects will drag for about six months. Backlog fell from about $2.93B in January to about $2.52B by July, and no major new power projects were added in Q2, against about $675M of first-half revenue. Management expects a handful of awards over the next 7 to 15 months, and high rates make this harder. Cramer thinks the work will come because electricity demand is strong, but the timing matters.

  “I like [Argan's] position here. Data centers are driving demand along with new factories... Meanwhile, the pool of contractors who know how to build power plants is pretty small.”at 35:08

• Jim Cramer · CNBCUncertain

  Argan needs new power contracts soon; demand will bring work, but timing is uncertain and rates don't help.

  Argan added no major new power projects in the second quarter, which is a real problem because it eventually needs major new business to replace the work it is completing. Cramer expects work to come given the demand for electricity, but the timing matters and high interest rates make it harder. Management expects a handful of new awards over the next seven to fifteen months, yet the CEO acknowledged the next job could arrive anywhere from next quarter to a year later, and that uncertainty is worrisome.

  “Eventually, [Argan] needs major new business to replace the work it's completing. Given the demand we're seeing for electricity, I think that work will come, but the timing matters. High interest rates certainly don't make it easier.”at 36:56

• Jim Cramer · CNBCBullish

  Argan's zero-debt, $1 billion cash balance and dividend raise show financial strength and shareholder confidence.

  Argan had about $1.03 billion in cash and investments against zero debt at the end of July, which helps it support large contracts. Some of that cash comes from customers paying ahead of construction, so it is not all surplus, and the business needs relatively little capital spending because it is paid to build facilities for other owners. The board raised the quarterly dividend 40% to 70 cents, its fourth consecutive annual increase, and the company has repurchased $124 million of stock since 2021. Cramer reads the dividend hike as an encouraging sign of confidence, though the yield is tiny.

  “[Argan] has financial strength behind its company... approximately 1,030,000,000 in cash and investments versus zero debt... a balance sheet helps [Argan] support large contracts.”at 37:31

• Jim Cramer · CNBCBearish

  Argan's roughly 25x forward earnings is a premium multiple that leaves little room for uneven quarters.

  With a market cap of roughly $5.5 billion, Argan is small enough that a few major contracts could move the needle, but it trades at just under 25 times next year's earnings estimates. Buying it means paying a premium multiple for continued growth. Cramer can justify a premium for Argan's scarce expertise and strong execution, but prefers to leave room for uneven quarters and delayed contract wins, since building power plants is not a smooth business. He says it won't be a great stock unless it becomes more affordable.

  “The stock's trading at just under 25 times next year's earnings estimates. So if you buy it, you're paying a premium multiple for continued growth.”at 39:18

• Jim Cramer · CNBCBullish

  Argan's business is excellent; he endorses holding for the long haul despite near-term blemishes.

  Cramer thinks Argan has an excellent business with scarce expertise and strong execution, and he likes it enough to endorse holding the stock for the long haul. He notes that short-term blemishes, such as the lack of new power awards and the data center worries, are holding it back. He would buy gradually and leave room for weakness, which could last through the midterms. Investors need to believe in management's ability to deliver and be confident that a sustained data center slowdown won't happen.

  “In the end, I like [Argan's] business enough to endorse holding the stock for the long haul.”at 39:41

Venture Global

• Jim Cramer · CNBCNeutral

  Venture Global has limited upside from around $13 after its contract controversy, so Cramer prefers another LNG name.

  Venture Global fell to about $7 after a contract controversy that customers disliked. Cramer says the stock has recovered to around $13, a level where he sees less upside than he would like, so he would not chase it.

  “But stuck here at 13, I don't see as much upside as I'd like.”at 10:34

Cheniere Energy

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Cheniere (LNG) is a better LNG buy than Venture Global, which has limited upside near $13.

  A caller asked whether Venture Global could run to $20. Cramer said the stock got a bad reputation after contract disputes, which investors have since forgotten, but at about $13 he sees less upside than he would like. He thinks LNG (Cheniere) is the better place to put money in the LNG theme and says he would buy it.

  “But stuck here at 13, I don't see as much upside as I'd like. I think LNG is better, and that's [what I mean:] the stock symbol is LNG. I would put my money in that.”at 10:34

General Motors Company

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  GM is a great company whose business is holding up, so its stock pullback from higher rates looks overdone.

  GM posted an excellent quarter in late July and the stock hit record highs. Since then, higher oil prices and rising interest rates have made auto loans more expensive, and the stock has given back most of its gains for the year. Cramer says the business is still holding up well, pointing to new heavy-duty truck models and a growing digital and services business. He sees the pullback as tied to rates rather than to the company's operations.

  “Like I said, this is a great company. They've been doing very well... And, frankly, business seems to be holding up a lot, I think, pretty well.”at 13:23

MP Materials

• Mary Barra · General MotorsBullish

  MP Materials is a key partner in GM's push for a resilient, closer-to-home supply chain.

  After COVID and the semiconductor shortage, GM decided it needed to rethink its supply chain. It began working with MP Materials more than five years ago to be closer to its markets and reduce supply risk. Barra says MP was among the first to recognize the need for onshoring or ally-shoring, and that MP is expected to produce validated parts by the end of the year.

  “we recognized we needed to rethink our supply chain. We started working with MP Materials over five years ago because we looked at... we wanted to be closer to where we sold the vehicle and have a more resilient supply chain.”at 18:54

Sterling Infrastructure

• Jim Cramer · CNBCBullish

  Sterling Infrastructure builds data centers; Cramer says to keep holding despite a steep drawdown from its peak.

  Cramer first recommended Sterling in August 2023 at about $80. The stock then climbed above $1,000 before falling back to the low $500s. He describes Sterling as an engineering and construction firm that builds data centers. Even after the drop, the stock is still far above his original recommendation, so he tells viewers to stick with it.

  “That's an engineering construction firm builds data centers... Even if that brutal decline slipped more than 500% for where I first recommended, I think you should stick with that one.”at 35:08

Nokia Oyj

• Jim Cramer · CNBCBullish

  Nokia's edge fiber is good, and it is a core component in data center growth; Nvidia invested at $6.

  Cramer likes Nokia because it makes fiber at the edge, which is really good, and it is a core component in the growth of the data center. He points out that Nvidia took a stake in Nokia at $6, which he sees as a sign of the company's importance in the buildout.

  “And don't forget they took some money from Nvidia at $6. And I think that they're actually a core component in the growth of the data center.”at 41:02

Intel

Across the shows: 5 speakers in other episodes, 3 bullish and 2 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Intel revived because AI agents need heavy CPU capacity, which is its core business.

  Once artificial intelligence took off, the hardware stocks that had been ignored began to outperform. Intel came back to life because AI agents need a ton of CPU capacity, and CPUs are Intel's bread and butter. That mechanism is why Cramer sees Intel's recovery as tied to AI demand.

  “Intel came back to life because it turns out that AI agents need a ton of CPU capacity, and that's their bread and butter.”at 44:48

Salesforce

Across the shows: 3 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Salesforce's business is strong and its buyback is large; an analyst's sell call on it is wrong.

  Software stocks held up, led by Salesforce, which got an upgrade. Cramer cannot believe an analyst kept recommending a sale of the stock when its business was so strong and its buyback was so voluminous. He points to the strength of the business and the buyback as the reasons the sell call looks wrong.

  “Software stocks hung in there, led by Salesforce... I still can't believe an analyst kept recommending a sale of the stock when business was so strong and a buyback was so voluminous.”at 46:34

Power demand & the grid

• Jim Cramer · CNBC

  Natural gas plants will be the main way to expand the grid, since they are cleaner than coal and faster than nuclear.

  Cramer argues that natural gas will be how the US boosts its electric grid for the foreseeable future. The country has plenty of gas, gas is cleaner than coal, and gas plants can be built much faster than nuclear reactors. He ties this to data center and factory demand for power.

  “for the foreseeable future, natural gas is how we'll be boosting the electric grid. Our country's overflowing with this stuff. It's cleaner than coal, and you can build these plants, but faster than say nuclear reactors.”at 34:58

AI infrastructure & data centers

• Jim Cramer · CNBC

  Data center backlash and a possible slowdown are weighing on Argan, which rolled over after its AI-driven run.

  Argan's stock went parabolic with other AI plays earlier this year, got caught up in the situational awareness hype, and then rolled over after that hype imploded. More negative headlines about data centers becoming politically toxic followed. If it becomes harder to build data centers, fewer new power plants will be needed. Argan reported a good quarter, but with its backlog shrinking and Wall Street worried about a data center slowdown, the stock has struggled to find its footing.

  “Mainly, I think it's because [Argan] got caught up in this situational awareness hype earlier this year... we started seeing more negative headlines about how data centers become politically toxic.”at 38:14

Market sentiment, positioning & volatility

• Jim Cramer · CNBC

  Software and hardware are a zero-sum rotation; both may be cheap, but the bottom is too hard to call.

  Since the end of June, software has rallied with the IGV up 23% while the semiconductor index is down 10%. Hardware keeps getting clogged. Cramer does not know when software and hardware will reach equilibrium. Both segments may be inexpensive given the incredible demand, but there is only so much money to go around, so the trade tends to be zero-sum. Because it is too hard to call the bottom in hardware stocks like Sandisk and Seagate, as it was too hard to call the top over the summer, he is staying out.

  “Perhaps both segments are inexpensive given the incredible demand, but there's only so much money to go around. So it tends to be zero sum, and it also tends to be wrong.”at 46:48