Jim Cramer on Salesforce.com (CRM), Starbucks (SBUX) and Alibaba IPO

NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Salesforce.com  (CRM) is still a "buy" and calls it the "king of the cloud" companies. Cramer notes the phrase "broken chart" in relation to this stock, which makes him interested. The stock rapidly fell from $68 to $58 and multiple IPOs in the cloud business are upcoming, but Cramer says not to dethrone Salesforce.


WATCH: Jim Cramer on Salesforce.com, Starbucks and the Alibaba IPO

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

----------

Separately, TheStreet Ratings team rates SALESFORCE.COM INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SALESFORCE.COM INC (CRM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 37.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, CRM's share price has jumped by 30.58%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • SALESFORCE.COM INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SALESFORCE.COM INC continued to lose money by earning -$0.40 versus -$0.48 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus -$0.40).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 459.5% when compared to the same quarter one year ago, falling from -$20.84 million to -$116.62 million.
  • Net operating cash flow has declined marginally to $271.24 million or 3.67% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SALESFORCE.COM INC has marginally lower results.
  • You can view the full analysis from the report here: CRM Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Cramer was asked if Starbucks  (SBUX) is still a buy despite China's slowdown. He noted the company has a major annual meeting this week and he does not want to sell the stock prior to that. He advises waiting until Thursday to sell.

Must Watch: Jim Cramer on Salesforce.com, Starbucks and the Alibaba IPO

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

----------

Separately, TheStreet Ratings team rates STARBUCKS CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate STARBUCKS CORP (SBUX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 11.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $432.20 million to $540.70 million.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.04% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • STARBUCKS CORP has improved earnings per share by 24.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STARBUCKS CORP swung to a loss, reporting -$0.01 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($2.67 versus -$0.01).
  • You can view the full analysis from the report here: SBUX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Finally, Cramer was asked how the Alibaba IPO would affect demand for other Internet stocks. He recommends Baidu  (BIDU), which is inexpensive in terms of the metrics compared to U.S. companies.

Must Watch: Jim Cramer on Salesforce.com, Starbucks and the Alibaba IPO

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

----------

Separately, TheStreet Ratings team rates BAIDU INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BAIDU INC (BIDU) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 44.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 89.49% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BIDU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • BAIDU INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $4.78 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($31.92 versus $4.78).
  • The gross profit margin for BAIDU INC is rather high; currently it is at 69.53%. Regardless of BIDU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BIDU's net profit margin of 34.28% significantly outperformed against the industry.
  • Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.37 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: BIDU Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

If you liked this article you might like

Shorts Trampled In Bull Market Rally; UPS Share Structure Examined -- ICYMI

Shorts Trampled In Bull Market Rally; UPS Share Structure Examined -- ICYMI

Jim Cramer: Short Footprints Everywhere

Jim Cramer: Short Footprints Everywhere

Jim Cramer: Odd and Crazy Market Has Lost Its Mind

Jim Cramer: Odd and Crazy Market Has Lost Its Mind

Twitter CEO Jack Dorsey: Our Independence Is an Advantage

Twitter CEO Jack Dorsey: Our Independence Is an Advantage

Expensive Stocks Get More Expensive; Activists to Stall Newell Asset Sales--ICYMI

Expensive Stocks Get More Expensive; Activists to Stall Newell Asset Sales--ICYMI