3 Buys, 2 Selling Ideas From Jim Cramer
During the week of January 21, 2013, Jim Cramer made reference to 42 companies. Just 21% of the calls were bearish. In that same time frame, the S&P 500 index rose 1.52% and is up 5.5% for the year.
In the technology space, Cramer was favorable on a number of richly-valued companies that includes salesforce.com (CRM) and Amazon.com (AMZN). For the week, the Nasdaq was flat, but is up around 2.9%. It is worth nothing that the technology-heavy index was weighed down by weakness in Apple, Inc. (AAPL).
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Of the 5 technology companies mentioned, Cramer was also bullish on SAP AG (SAP):
Analysis and Discussion
1. Amazon.com Inc. (AMZN): Operates as an online retailer in North America and internationally. Market cap at $125.04B, most recent closing price at $276.04.
AMZN shares are trading at an astronomically high P/E of 4,057 (based on a closing price of $283.99). Its forward P/E is 163. Investors completely ignored reasonable valuation, choosing instead to anticipate a strong future. Amazon shares were supported by strong earnings from eBay (EBAY) and Google (GOOG). Amazon’s CEO said in a recent interview that higher margins should be less a focus than free cash flow.
Investors are in agreement with this view even though free cash flow tells only partially describes the health of a business. Analysts expect the company to generate an operating cash flow of $10.68 per share, up 65% in 2013. Amazon reports earnings on Tuesday, January 29 after the market closes.