Extreme valuations seem like they are everywhere, Jim Cramer told his Mad Money viewers Monday, but in reality, most stocks are still down for the year.
Cramer said the Nasdaq gains have been staggering, but outside of the FANG stocks, the gains are less impressive. What makes stocks like Apple, an Action Alerts PLUS holding, and Tesla so special? Cramer said it all comes down to execution.
Apple may seem expensive at 33 times earnings with a 10% growth rate, Cramer explained, but shares are actually not that expensive when you consider Apple's product-plus-services model that gives it tremendous earnings potential. The trade war with China is perhaps the company's only risk at the moment and if the Democrats win the White House, even that risk may be minimal.
As for Tesla, Cramer said the stock's 380% move this year can be justified if you look at the company not as a car company, but as a technology company that makes cars, trucks, solar energy and storage solutions. Investors should not chase shares of Tesla higher, Cramer cautioned, but he can certainly justify the current valuation.
Cramer said that as long as CEOs Tim Cook and Elon Musk continue to execute, shares of Apple and Tesla will continue to head higher, especially after their stock splits go into effect, making them even more attractive to individual investors.
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Executive Decision: Fiserv
For his third "Executive Decision" segment, Cramer spoke with Frank Bisignano, president and CEO of Fiserv (FISV) - Get Fiserv, Inc. Report, the small business payment processor with shares off 17% for the year.
Bisignano said Fiserv is in the business of helping small businesses grow and its Clover payments platform saw 32% growth in the month of July. He said transaction volumes on its ecommerce platform are still increasing and now that businesses are reopening, transactions are growing again in stores as well.
When asked about the prevalence of cash in our new retail environment, Bisignano said cash had already been in decline as a payment choice, but with the pandemic, ATM and in-store volumes are declining by double-digits.
Fiserv has an omni-channel platform that helps businesses no matter where they are, Bisignano explained. It continues to innovate both online and in stores with new order ahead capabilities. And the company has strong partnerships with banks and software vendors.
Executive Decision: Palo Alto Networks
In his first "Executive Decision" segment, Cramer spoke with Nikesh Arora, chairman and CEO of Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report, the cybersecurity company that just posted a nine-cent-a-share earnings beat with an 18% increase in sales and strong guidance. Shares of Palo Alto fell 4.8% on the news after running ahead of the quarter.
Arora explained that Palo Alto has been transforming itself from a single-product company into one that now offers three different platforms for their customers. He said investors have been mistakenly focusing on the declining need for office firewalls. But they fail to see that as companies move to the cloud and work from home, they will need integrated solutions for all three places and that's what Palo Alto now provides.
Palo Alto is also expanding into new services with the recently announced acquisition of Crypsis Group. Arora said that Crypsis is an instant response company with 1,700 customers. He said companies cannot wait until after a breach occurs to take action, and now Palo Alto customers can use Crypsis the moment they feel something is wrong with their network.
Finally, Arora commented on the recent work-from-home trend. He said over the past few months, we've proved the social experiment works. That's why Palo Alto doesn't expect everyone to return to their offices, which will now be called collaboration centers. His company is working on new flexible benefits, learning and location programs for their employees, giving them the choice to work from wherever they wish.
Executive Decision: BioReference Labs
For his second "Executive Decision" segment, Cramer also spoke with Jon Cohen, executive chairman of BioReference Labs (BRLI) , to discuss the company's partnership with the NFL after 77 COVID-19 tests incorrectly came back positive.
Cohen explained that BioReference Labs has performed over 4.3 million COVID-19 tests thus far. He said the situation with the NFL involved 77 tests that received a false positive. Those players were immediately isolated and retested and their samples were retested on a different platform, both of which confirmed they were all negative.
Cohen said there are places in the testing chain where false positives can occur, and they were able to quickly determine the contamination occurred in their specimen preparation area, and mitigation steps have been taken to eliminate those conditions.
When asked about the NFL's testing model, Cohen explained that the NFL has a different model than the NBA, which has everyone in a single location. The NFL is testing in 30 cities, each with differing levels of COVID-19. The model can work, he said, as we've proven that wearing masks and social distancing is effective.
In his "No Huddle Offense" segment, Cramer opined on the upcoming IPO of Airbnb. He said those investors who think the pandemic has destroyed Airbnb need to think again. In reality, Airbnb is benefitting from COVID-19.
Before the pandemic, staying at someone's home seemed risky. But post-pandemic, staying at an expensive, crowded hotel seems like the more risky move, Cramer explained. In fact, Airbnb may be the safest way to travel and the company has the market all to itself. That's why Cramer said the trajectory for Airbnb is higher.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
Huntington Ingalls Industries (HII) - Get Huntington Ingalls Industries, Inc. (HII) Report: "I'm not going to endorse that one. I like Raytheon Technologies (RTX) - Get Raytheon Technologies Corp Report or Lockheed Martin (LMT) - Get Lockheed Martin Corporation (LMT) Report."
Gilead Sciences (GILD) - Get Gilead Sciences, Inc. (GILD) Report: "They're the gang that can't shoot straight. It's got a 4% yield but I'd skip it. Look at Regeneron Pharmaceuticals (REGN) - Get Regeneron Pharmaceuticals, Inc. Report."
International Flavors and Fragrances (IFF) - Get International Flavors & Fragrances Inc. (IFF) Report: "I think this merger is going to be terrific. The stock is a buy right here. I also like Estee Lauder (EL) - Get Estee Lauder Companies Inc. Class A Report."
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL. MSFT.