This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Jim Cramer: Where Faux Wisdom Makes Real Money

Stocks in this article: HPQINTCWDCSNDKAAPL

NEW YORK (Real Money) -- Sometimes the case in the tech world gets made even when it shouldn't be, and everyone eventually accedes to it. For example, even as there is absolutely no real evidence that the personal computer isn't falling off a cliff, the consensus has developed that it has gotten better. This view says you need to buy Hewlett-Packard (HPQ) and Intel (INTC) -- which, these analysts also claim, have lots of storage kickers away from personal computers to bring out value.

That's just perceived wisdom, but it has been one of the strongest calls out there.

Or how about Seagate (STX) and Western Digital (WDC)? The consensus, as represented by short-sellers -- and not unlike the view on HP -- has been that disk drives are going away courtesy of the personal computer's secular decline, and aided by increased production.

But these very basic tech components have managed to keep new supply down while at the same time becoming "low-multiple cloud plays." That's because you need to personally store your pictures in case something happens to your handset or if you run out of room. Disk-drive makers have turned out to be the hottest segment in the market. Again, these shares are rallying because there is an amazing short base in them. SanDisk (SNDK) is rallying, similarly, because it is perceived as the only pure play on the tablet revolution.

Of course, while we now love Seagate and Western Digital as cloud-computing plays, the actual cloud plays are now scorned because there are too many of them. One of the eerie analogies to the 1998-to-2000 period is that, back then, there was such an initial lack of Internet plays that they all got bid up. (The revolution began when CBS MarketWatch came public in 1998.) It took a while to saturate, almost two years. But once you got the saturation, the group was history. At the current juncture, cloud is at saturation levels -- but the existing players, at least, are profitable. Still, as hot as the drives are despite their old-fashioned nature, the software-as-a-service plays are just plain full-up.

For the longest time we heard that it didn't really matter if Apple (AAPL) introduced a bigger-screen handset. Turns out that the big incremental sales pick-up comes from at least a 5.1-inch -- that is, Samsung's Galaxy -- and even that might not be big enough. When you listen to the Google (GOOG) call, you get that bigger is better, because people are spending a huge amount of time on their handsets and they simply are too small. The iPhone is too small. Daymond John, the Shark Tank judge who predicted Samsung's Galaxy would catch and pass the iPhone a year before it happened, basically said same this week when he was on Mad Money.

One thing is absolutely for certain: This newfound conventional wisdom makes you money pretty much on good and bad days. The rest is just a free-fire zone for the shorts. This is in part because of secondary offerings, and in part because of insider selling, and in part because there are so many more deals in the pipe.

But they aren't going to have any more companies like Intel, SanDisk, Seagate or Western Digital -- with their share buybacks and dividend boosts and no insider selling to speak of -- coming public any time soon. Maybe that, more than anything else, is real reason for the dichotomy.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL and GOOG.

Editor's Note: This article was originally published at 9:12 a.m. EDT on Real Money on April 17.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs