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NEW YORK (TheStreet) -- Don't let the critics dissuade you, Facebook (FB) is a must-own stock, Jim Cramer told his Mad Money TV show viewers Thursday. Cramer said this stock, which he owns for his charitable trust, Action Alerts PLUS, still has a lot of room to run.
It's inevitable that when a stock sees the kind of growth that Facebook has, the critics will be out in force, comparing the company's market cap to that of high-profile names in the Dow Jones Industrial Average or the S&P 500. But these comparisons don't mean a thing, Cramer continued. The only thing that matters is earnings.
Facebook is expected to earn $3 a share in earnings and is currently growing at 60% a year. Cramer said money managers are willing to pay twice a company's growth rate, but in this case he used just half its growth rate for his calculations. That means Facebook is worth 30 times $3, or $90 a share.
But what if those earnings estimates are too low, or its multiple too conservative? Cramer said the fact is that Facebook deserves to be trading higher because after a slow start, the company just about has a monopoly on mobile advertising. That monopoly will be worth big bucks in the "out years" of 2016 and beyond, he concluded.
Executive Decision: David Weinberg
For his "Executive Decision" segment, Cramer spoke with David Weinberg, CFO and COO of Skechers USA (SKX), a stock that rose 8% today to an all-time high after the company reported a 28-cents-a-share earnings beat on a 37% rise in revenue. Shares of Skechers are up a quick 18% since Cramer last spoke with Weinberg on June 4.
Weinberg credited Skechers' strong quarter to its products, which he said resonate with customers around the world. He said Skechers has one look that sells everywhere.
When asked about its use of celebrities in its advertising, Weinberg said Skechers uses celebs all over the world, and their testimonials are appealing to both young and old consumers.