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TheStreet Open House

Cramer's 'Mad Money' Recap: The Benefit of Doing Nothing

Workday is not yet profitable and only has 340 customers thus far, but Cramer said what's important to note is both the market opportunity, $39 billion, and Workday's growth rate -- the company increased revenue by 98% last year. While Workday is still losing money while it invests in its business, the percentage of the company's costs versus its revenue is declining rapidly, which is a very good sign.

So how much should investors be willing to pay for Workday? The IPO is expected between $21 and $24 a share, but Cramer said strong demand may send shares higher. At the middle of that range, Workday would be trading at 18 times sales, which is expensive by traditional metrics, but well below stocks like Guidewire (GWRE) and Palo Alto Networks (PANW), two recent IPOs that popped on their first day of trading and continued higher.

Based on the valuations those companies received, Cramer said he'd be willing to pay up to 20 times sales for Workday, which would put the share price at no more than $27.50 a share. He said this premium is justified given how fast the company is growing and how solid its management team has executed thus far. Beyond $27.50 a share however, Cramer said he'd take a pass.

Looking for Winners

As we enter the fourth quarter of the year, Cramer said growth and momentum fund managers follow a predictable pattern, they identify a handful of stocks that they deem winners and start piling in. These "anointed" stocks just cannot be stopped, noted Cramer, which is why he's featuring 10 of them throughout the week. His first two anointed winners were (AMZN) and Google (GOOG).

Shares of Amazon are already up 50% for the year, while Google is trading just 17% higher. But these gains won't stop money managers from taking them a lot higher, said Cramer, as there is a lot to like at both companies.

Amazon has become the Wal-Mart (WMT) of the Web, said Cramer, a beloved retailer with prices and selection that are second to none. But Amazon hasn't stopped there. Under the leadership of CEO Jeff Bezos, the company has expanded into making hardware like it's successful Kindle tablets, as well as into online media distribution, making it a true online marketplace for the world.

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