Trillion-Dollar Tech: Cramer’s ‘Mad Money’ Recap (Thursday 10/29/20)

There are many smart, rigorous money managers that feel the FAANG stocks are ridiculously expensive. But Jim Cramer told his Mad Money viewers Thursday that while Facebook  (FB) – Get Report, Amazon  (AMZN) – Get Report, Apple  (AAPL) – Get Report, Netflix  (NFLX) – Get Report and Alphabet  (GOOGL) – Get […]

There are many smart, rigorous money managers that feel the FAANG stocks are ridiculously expensive. But Jim Cramer told his Mad Money viewers Thursday that while Facebook  (FB) – Get Report, Amazon  (AMZN) – Get Report, Apple  (AAPL) – Get Report, Netflix  (NFLX) – Get Report and Alphabet  (GOOGL) – Get Report are expensive by traditional metrics, when you look at the metrics that really matter, it’s ridiculous to not invest in them.

Yes, the FAANG stocks do have higher than average P/E ratios, around 35 times earnings, but that’s only because these are better-than-average companies, Cramer said. The outlier is Amazon, trading around 120 times earnings. But Amazon has faster growth, a bigger total addressable market and has become an indispensable part of our COVID-19 lifestyle.

To find stocks with truly nosebleed valuations, you need to look at stocks like Snowflake  (SNOW) – Get Report, trading at 130 times sales, not earnings, or Zoom Video  (ZM) – Get Report, trading at 58 times sales.

What makes the FAANG stocks unique is they are proprietary. So much so, they often appear before Congressional antitrust committees. To call them ridiculously expensive, however, is just nonsense. Even Apple, which fell 5.3% by the close Thursday, has tremendous opportunities ahead of it with the coming 5G iPhones and an ever-growing service revenue stream.

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