view transcript

We're going to talk about Google? What do you think?

Jim Cramer: Well, I was going to say, about to go to my favorite stock.

Marc Chaikin: Or Alphabet. I refuse to call it Alphabet.

Jim Cramer: My favorite stock that we own in the [inaudible 00:18:28] is Alphabet.

Marc Chaikin: And that's my favorite stock. Made it my bullish stock of the week.

Jim Cramer: All right, tell me about it because I love it when I hear that, but I'm on the same page.

Marc Chaikin: Amazon is doing one thing but Google is really a pure play in the new technology, new economy. What I really like is what I said in January. You did something wonderful in January. You said, you know, I don't like their messaging. They're making all these investments in R&D and they're not explaining it well. But then you were on after the last report and you said they got it.

Jim Cramer: Well, Ruth Porat is a friend. I'm not saying she does what I say, but Ruth Porat heard what I said. I know that for a fact. What Ruth did was answer a lot of the objections that I had, because I think it's the great American company. A tremendous presence in Europe, now they're doing China. No one's even talking about that. But they've decided, look, there's too much, there's too much business there and no one's giving them any credit Marc. But this is not an expensive stock.

Marc Chaikin: No. This is a cheap stock. If they earn $48, what's the P/E ratio? It's not really bad for a company that for I think 34 quarters has grown at 20% a year and it's now 100 billion in revenue. So this is a giant. But, here's another thing I really love about Alphabet. $10 billion in the first half in R&D capital expenditures. Waymo, Internet of Things, AI. They have a new photos initiative that I hear is fabulous. One of our son's friends at the Jersey Shore is from San Francisco. He's COO of their photo and their messaging division. He said they're using AI in an amazing way. They're actually making money with AI. We hear this all the time. AI this, AI that. Search and YouTube has become a monster.

Jim Cramer: Now, people don't understand that YouTube is, people say, well, CBS is so well as a stock but YouTube is every channel. It's like every single network.

Marc Chaikin: And the ad revenues on YouTube are starting to scale. Part of the reason is AI. What did Morgan Stanley say in terms of what it might be worth?

Jim Cramer: Oh my God, they had price targets that were like ...

Marc Chaikin: Well, no, I'm talking about just Waymo.

Jim Cramer: It's worth the price of the institute, is worth the price of the company.

Marc Chaikin: They were saying 50 to 75 billion and then now they said 125 to 175 billion.

Jim Cramer: Remember what they always tell you because a lot of people feel autonomous driving could be dangerous. Right now we have the equivalent of a 737 plummeting to earth every single week. Would you still use, that's what the car accident fatalities are. Would you think that Boeing would be able to do that? They would shut down all air. They would shut down all the airplanes. This is a chance to be able to get away from that cycle. I want you to break down power gauge Alphabet since we like it so much.

Marc Chaikin: Well power gauge rating, I think what's going to go up here on the screen, very bullish. All the metrics are strong.

Jim Cramer: Go with the metrics because this is why it's so rigorous.

Marc Chaikin: So, there's your power gauge. It's mainly earnings and expert opinions that are driving the stock. The technicals are actually stronger than that suggest, there's a little bit of mean reversion. So, in the power gauge rating, we're looking at consistency of earnings. Earnings, growth, we're looking at earning surprise. We just got another great earnings surprise in the last quarter. And then expert opinions, as you know, that's the key to making money on Wall Street. Follow the smart money. So you've got analysts raising their estimates. You've got analysts raising their opinions. We're in a strong industry group. Insiders actually are buying the stock which is pretty amazing given how far its run.

The key thing here is though the technicals are neutral. The reason is there's going to be a little bit of mean reversion. You've had a big run and now you're seeing that mean reversion. I think this is a great buying opportunity right down here at 1900. I think we're at 1900 now.

Jim Cramer: We always struggle. We get so many new people who are members of the club and I always like to say, look, this is the one I would buy right now. I have to like Salesforce, get to Salesforce. I am going to reemphasize Alphabet after your word because I had been saying well, look, you didn't get a chance but what you're saying is is that it's just cheap. So, relative to its growth rate.

Marc Chaikin: We can pretty much know that the next quarter is going to be a positive earnings surprise. You have this period between now and October when they report third quarter earnings, where you're really going to be able to buy this stock comfortably. There's nothing happening that's going to move the stock to new highs tomorrow. That's why this weakness is such a great opportunity.

TheStreet's founder and Action Alerts PLUS Portfolio Manager Jim Cramer sat down with legendary market technician Marc Chaikin for an exclusive one-hour webinar.

Alphabet (GOOGL - Get Report) is Cramer and Chaikin's favorite stock.

"Google is a pure play in the new economy," Chaikin noted, adding that the stock isn't currently expensive. 

Alphabet is a holding of Cramer's charitable trust Action Alerts PLUS.

"I think it's the great American company," Cramer noted.

To watch a replay of the one-hour Cramer-Chaikin webinar, click here.