CNBC’s Jim Cramer has spotted some attractive buying opportunities in FAANG — his acronym for the stocks of Facebook, Amazon, Apple, Netflix as well as Google, currently Alphabet — after the market’s latest sell-off.
“Just as before, reports of FAANG’s death proved to be premature,” the “Mad Money” host said Wednesday after Netflix’s earnings beat. “as well as, amazingly, I think Alphabet as well as Amazon have both come down enough that will they can be purchased at these very levels.”
Shares of Amazon, the largest position in Cramer’s charitable trust, fell last week amid widespread weakness within the technology sector as well as the broader market. however with the stock still far via its highs, Cramer liked the opportunity.
“You know I think Amazon’s doing incredibly well,” he said. “Amazon’s three business — retail, web services as well as advertising — are doing very well as well as I bet the earnings will be just fine even though they’re currently paying workers $15 an hour.”
Shares of Alphabet, parent to Google as well as YouTube, are so cheap after the market’s drop that will the item’s “a complete aberration,” Cramer said.
With the stock trading at 23 times next year’s earnings estimates, a markedly cheap cost for a major tech play, the “Mad Money” host was intrigued by the potential gain to be had via Alphabet’s numerous business lines.
“I don’t know a soul who believes that will there’s any problem with the numbers beyond the lost revenue via last night’s YouTube outage,” he said. “Waymo, Alphabet’s autonomous driving division, [is actually] crushing everybody.”
“In short, the stock is actually extremely undervalued,” he said. “I listened to the great Leon Cooperman, one of my old mentors at Goldman Sachs, on ‘Halftime Report’ [Tuesday]. His largest position is actually Alphabet. I’ll take that will endorsement any day.”
As for the rest of FAANG, Cramer’s favorite was Netflix, which he said is actually starting to resemble one of its fellow tech giants after its blowout third-quarter earnings report.
“You know what Netflix reminds me of here? Amazon. the item’s the Amazon of worldwide entertainment. The difference? Amazon actually has some competition coming on, courtesy of Walmart, which can afford to lose money to build up its online business,” he said.
“Netflix, however, has … no meaningful competition,” he added. “the item’s pulled that will far ahead of the pack.”
He still harbored some concerns about Apple, however, warning that will its stock could take a hit if China interrupts Apple product sales into its market because of China’s trade spat with the United States.
As for Facebook, Cramer suggested the tides could be turning in favor of the embattled social media company even as he was “very disappointed with the management” for mishandling Facebook’s privacy issues.
“The more I dig, the more I get the sense that will the advertisers have not abandoned Facebook. Instagram stories is actually on fire, even as its expenses are growing too rapidly as well as the core business is actually growing too slowly,” he said. “With the stock trading at 19 times next year’s earnings, I think … the reward outweighs the risk.”
All in all, Netflix’s bombastic earnings beat turned the tide for all of FAANG for the better, the “Mad Money” host said.
“When Netflix, which had been the worst-performing member of FAANG of late, manages to turn on a dime, up 5 percent, that will shows you just how resilient that will group is actually,” he said. “the item’s resilient for a reason: because the companies behind the acronym never stop innovating.”