Cramer Quick Take: Microsoft: the Growth Stock of Yesteryear?
NEW YORK (TheStreet) -- Is Microsoft (MSFT) your father's and grandfather's growth stock? Jim Cramer told Debra Borchardt at TheStreet Thursday the markets are re-evaluating the multiples given to stocks like Microsoft and Apple (AAPL) , a stock which he owns for his charitable trust, Action Alerts PLUS, and the new multiples are far less than in the past.
Cramer said with Apple trading at 8.6 times earnings with a 17% growth rate, it's hard to see how Microsoft, trading at 8.2 times earnings with just a 9.5% growth rate, can justify its valuation. He said for the younger generation of investors, stocks like Microsoft aren't viewed as the hot growth stocks that they must own. Instead, stocks like Amazon (AMZN) and Netflix (NFLX) currently hold those titles.
So what is a fair value for Microsoft? Cramer said he thinks the stock could bump up between $1 to $3 a share, but it could also lose $1 while the market trying to put a new value on stagnated growth.
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-- Written by Scott Rutt in Washington.
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