NEW YORK ( TheStreet) -- Don't fear good economic data, embrace it. Those were Jim Cramer's words to the viewers of his "Mad Money" TV show Wednesday, as he urged them to not be consumed by economic data and instead focus on what matters, earnings. Cramer said that any pundit who attributed today's stock market rally to words coming out of the Federal Reserve or some other economic factors are simply wrong. Moreover, sentiments like that are both confusing and harmful to many investors. The theory that "if things are bad, the Federal Reserve will swoop in to save us" just doesn't make any sense, Cramer continued. Investors should be investing, he said, and that means investing in the future earnings of great companies. What the U.S. economy really needs is not low interest rates, it's jobs, said Cramer. Jobs creates spending, he said, which in turn drives home sales, auto sales, consumer lending and so much more. And all of that spending translates into earnings, which then drives stocks higher. That's why Cramer continued to pound the table on great growth names like Apple ( AAPL) and IBM ( IBM), two stocks which he owns for his charitable trust,
Upon Further ReviewIn the "Upon Further Review" segment, Cramer took a closer look at the earnings of eBay ( EBAY), which last week delivered a 4-cent-a-share earnings beat on better-than-expected revenue and raised full-year guidance to boot. That news sent shares rocketing up 13%, but Cramer said the stock should be a whole lot higher. Cramer explained that what got lost in eBay's earnings is its vision for PayPal, its online payments solution. PayPal now sports more user accounts that either Visa ( V) or MasterCard ( MA) and is already the default way to pay online without relinquishing sensitive credit card information. But PayPal's plans for the future go far beyond online shopping. The company is betting big on mobile payments, which it expects to top $7 billion this year, up from $4 billion last year. PayPal is also testing its first point-of-sale terminals at Home Depot ( HD), which allows customers to pay using just their mobile phone number with a PIN.
Cramer said when it comes to valuation, eBay is just far too low. Visa has a marketcap of $99 billion, while MasterCard tops out around $56 billion. Yet for eBay, the entire company is only valued at $51 billion despite the fact that PayPal only accounts for 38% of the company's revenues. Shares of eBay may be just off their 52-week high, but Cramer said trading at just 13.2 times earnings with a 12% growth rate and $4.50 a share in cash, investors can buy into PayPal and get the rest of eBay for free.
Slicing AppleSometimes the Wall Street research machine gets it wrong. And when they do, Jim Cramer will be there to call them on it. Such was the case with Apple ( AAPL), a stock that sold off 11% ahead of yesterday's earnings due in large part to one Wall Street analyst after another issuing warnings that the company couldn't possibly make its numbers. Cramer called the analysis of Apple one of the biggest screw-ups he's seen in decades, as analysts struggled to come up with sales estimates that were even in the same ballpark as what the company was able to deliver. There wasn't a single analyst that was forecasting Apple's staggering $2.26 a share earnings beat. So why did the estimates go so horribly wrong? Cramer said that first off, Wall Street was taking its cues from U.S. wireless carriers who didn't activate as many iPhones as expected. Some analysts also questioned whether U.S. carriers would continue to promote the iPhone as heavily or offer such generous subsidies on the device. But Cramer reminded investors that Apple now sells the iPhone in 100 countries via 230 carriers. U.S. carriers, he continued, simply aren't important any more. As for carriers promoting other phones, Cramer said that also doesn't matter, since customers want the iPhone. "It doesn't matter what the carriers promote," he concluded. Then there's the iPad, where sales were up 150% year over year. Here analysts took their cues from part suppliers who cited huge inventories of chips. Surely that means that Apple isn't selling many iPads, right? In fact, Apple couldn't make enough iPads to fulfill demand. As for all those extra chips, the parts supplies simply made too many, affording Apple better prices to boost margins.
Cramer said while the analysts were focusing on a single tree, they totally missed the bigger forest that is Apple. He once again urged investors to invest in this great growth stock for the long-term and to ignore the "research reports" that for the most part, aren't meant for the individual investor anyway.
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