At any given moment there are always a couple of stocks that defy traditional expectations," Cramer said.
"That is, Telsa is up 454% year to date," Cramer explained. "The company has a market cap of $22 billion, yet it will be lucky to sell 22,000 cars this year. By comparison, GM sold 9 million cars – more than 100 times Tesla, yet its market cap is $51 billion, a little more than two times Tesla.
Conventional analysis would suggest Telsa shares are ahead of themselves; that a decline is imminent. But, in this case, that kind of common sense conclusion would probably end up generating losses.
That's because "People love Tesla's cars," Cramer said. They absolutely love them. And when customers have such an emotional response to a product, the company's valuation can defy conventional analysis.
On the Street pros would say, "Tesla has momentum," Cramer explained. And as long as a company's growth potential combined with customer enthusiasm for its products remains strong, the Street will likely reward the stock with a very high multiple.
Therefore, despite the sky high valuation, Cramer believes the path of least resistance remains higher.