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NEW YORK (
) -- "It's time to dispel the notion that some stocks are too expensive," Jim Cramer told the viewers of his
"Mad Money" TV show Monday.
He explained that a high share price does not mean a stock is too expensive.
, two stocks which Cramer owns for his charitable trust,
Action Alerts PLUS, along with
Chipotle Mexican Grill
. Cramer said these triple-digit share prices may seem terrifying, but on a price-to-earnings mulitiple, these stocks are actually cheap.
"The share price tells you nothing about the value of a company," Cramer reminded viewers. He said the notion that investors can't make money in these stocks by owning just a few shares is totally wrong. He suggested investors divide these companies' share prices and earnings by 10 to make them easier to get a handle on.
Failing that, Cramer said investors may also want to consider deep-in-the money call options as a way to control the same amount of stock for less money. He said that in-the-money calls offer all of the upside, with very limited downside, and can be a great way to control a larger number of shares.
Cramer said he'd love to see Apple, Google and Goldman split their stocks 10-to-1 to make them more accessible to everyone, but even without a split, he said, these are still great stocks to own, no matter how you end up buying into them.
"When a powerful growth stock stalls, a lot of people panic," Cramer told viewers, but that panic isn't always warranted.
, one of stocks in Cramer's C.A.N.D.I.E.S. high growth portfolio. On June 21, Netflix reported its earnings, only to see its share price plummet from $199 to $95 a share. On June 26, Cramer said the panic was overdone, and that the stock had room to run. Since then, Netflix has recovered to $116 a share.
Cramer said history is now repeating itself with pharmacy benefit manager
, a stock that's lost 14% since it reported.
Cramer said Express Scripts is merely taking a breather, and its long-term story remains in tact. He said while some analysts worry over pricing pressure and the company losing clients, price pressure can't stop the Express Scripts' upward momentum, nor the fact it has a 95% customer-retention ratio.
The real driver for Express Scripts, said Cramer, is that fact that over the next four years, over $100 billion worth of prescription drugs are coming off patent. Once generics are available, Express Scripts will make more money. He said this market is always competitive, but the patent story isn't changing.
Express Scripts reported earnings of $3.10 a share, up from $2.92 last quarter and seven cents better than estimates. He said the company trades at just 14.4 times earnings, making it the cheapest of the C.A.N.D.I.E.S. portfolio.
"Express Scripts is a broken stock," said Cramer, "not a broken company."
Mobile Internet Play
It's hard to believe it's almost been a year since Cramer debuted his Mobile Internet Index of the hottest stocks taking advantage of the mobile Internet tsunami. Yet a year later, the index is up 29%, compared to just 13% in the
But even with the index's success, Cramer said it's time to make a change.
Cramer said with
getting a takeover bid, that stock's upside has now been capped, and its time to ring the register and swap into the little known
Cramer said put simply, Acme Packet makes the network equipment needed to seamlessly transfer voice and video across the Internet. By all estimates, this sector will be a $2 billion business by 2014, and Acme is the largest player with 50% share, four times that of its largest competitor.
With 66% of its business coming from North America, Cramer said Acme has plenty of room to expand internationally, and is starting to win big in China. It beat earnings by one cent a share on revenue that was up 62% from year ago levels. Gross margins were an impressive 84%.
"There's nothing to dislike here," said Cramer, noting that Acme shares ran up ahead of their earnings and have sold off since. He said this stock trades at 37 times earnings with a 26% long-term growth rate, and that makes it a buy, buy, buy.
Outrage of the Day
Cramer sounded off on the upcoming IPO of General Motors. He implored the government to do the right thing, and allow everyone to get in on the deal.
Cramer said if the government takes GM public using a traditional offering, only the brokers and their fat cat clients, will make money. He said they may complain that anything other than a traditional offering will work, but as Google proved with their open auction concept, it's possible for everyone to win.
Cramer said it's time to stop the "business as usual" on Wall Street. He said what's good for GM is good for Americans, and not just for the rich hedge funds. "Let the people in," he pleaded.
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-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Goldman Sachs, Apple.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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