"Mad Money:" Jim Cramer Believes Current Tech Rally Is Justified (FFIV, AKAM, JDSU, VMW, ORCL, IBM, AAPL, RIMM, ONNN, GS)
CNBCs "Mad Money" TV show had Jim Cramer telling his viewers to change their skeptical stance on money-making trends of the market. In the show, he pointed to the stark differences between the tech rally happening today and the one that happened a year ago. He said that today's tech rally is all about speculating in the right manner, rather than in the mindless manner done by investors during the dot-com tech bubble of 2000.
Cramer believes that the three themes driving tech stocks are:
- The need for an Internet that is faster and better at providing services, such as video, to more and more consumers. This theme is driving stocks like F5 Networks (NASDAQ: FFIV), JDS Uniphase (NASDAQ: JDSU) and Akamai (NASDAQ: AKAM) to achieve triple-digit gains in a year.
- On cloud computing, which enables companies to share and store their applications online instead of desktop hard drives, Cramer pointed out that this theme is driving stocks such as IBM (IBM), VMware (VMW) and Oracle (NASDAQ: ORCL).
- The much hyped "mobile Internet tsunami" involves the proliferation of smart phones and mobile devices. This theme is driving Apple (NASDAQ: AAPL), Research in Motion (NASDAQ: RIMM) and all of their component makers.
According to Cramer, the existing tech companies generating impressive earnings and those with growth prospects are exhibiting better value as new tech stocks are not making an entry into the market every day. With these factors in place, Jim specifies that the current tech rally is more than justified.
In Thursday’s "Sell Block" segment, Jim commented that you can never get a true picture from the headlines. Quoting the example of liquor purveyor Brown-Forman (NYSE: BF), Cramer said that while the headlines focused on the company’s 10-cents-a-share earnings beat, they failed to point out that the beat was the result of inventory shifts and currency translation. Cramer said that BF is a sell, since its flagship Jack Daniel's brand is seeing price declines.
When asked, Cramer informed a viewer it is not unusual for a firm’s research arm to recommend a stock and the asset management arm to sell the same, as these arms are completely separate in big brokerages like Goldman Sachs (NYSE: GS).
Cramer told the sellers of ON Semiconductor (NASDAQ: ONNN) that they are wrong in their decision, as that stock is poised to move higher.
