The big moves in Apple and Tesla may look like "smoke and mirrors," if you fail to judge the companies correctly, the "Mad Money" host said. Subscribe to CNBC PRO for access to investor and analyst insights: [ Ссылка ]
CNBC’s Jim Cramer on Monday recommended Apple and Tesla as buys, should their share prices fall on their upcoming stock splits.
Apple, a communications device maker, and Tesla, a motor vehicle manufacturer, valuations are at or near record levels, but Cramer isn’t buying the notion that their stocks are expensive.
“If you judge Apple as a pure hardware play, or you judge Tesla as a pure car company, then you’re right, all these moves are all smoke and mirrors,” the “Mad Money” host said.
Tesla shares have surged triple digits this year, giving the company a $375 billion mark—et valuation, more than Toyota, General Motors and Ford combined. Apple holds a market cap of $2.1 trillion with shares up 71% year to date.
The way Cramer sees it, Apple is a consumer products company that sells must-have technology. As for Tesla, it’s a technology firm that happens to make cars
Apple is preparing to issue a stock split, or divide its outstanding shares, on a four-for-one basis. The split will reflect in the trading price on Aug. 31.
Tesla is set to divvy up its outstanding shares five-for-one that same day.
“They’re both stocks — and in the end, stocks can break your heart — but if Elon Musk and Tim Cook continue to execute, I bet their long-term trajectory is up,” Cramer said.
Cramer has an oft-repeated mantra for Apple — “own it, don’t trade it” — and the former hedge fund manager is staying by it in the post-split, which will be the fifth split in the company’s lifetime on the public market. While the stock is trading at a “pretty expensive” price-to-earnings multiple of 29 times for a tech company with a 10% growth rate, it would rank among the cheapest in the industry if valued as a consumer product company, he said.
The host particularly likes Apple for its service business and customer loyalty, which is siphoned through its various devices, such as handhelds, laptops and watches, that provide multiple pools of revenue.
“Apple makes necessities in this digital era,” Cramer said. The stock “could pull back as many of the owners sell a share of the four to lock in their gains—that’s the old pattern—but after the split-induced pullback, you know what, time to buy again.”
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