(Click for video linked to a searchable transcript of this Mad Money segment)
Jim Cramer always advocates putting money to work in stocks of good companies. However, given current levels, he says, "some of those stocks are just going to have to go up without me."
That is, even though Cramer believes the companies are good, their stocks trade at multiples that Cramer just can't reconcile.
And with high multiple stocks rallying into summer after swooning earlier in the year, Cramer thinks now is a good time to again assess why you own these stocks and whether the risk remains worth the reward.
Tesla: Although Cramer is a big fan of Tesla's cars, he worries that Tesla stock trades on excessive exuberance. And with Tesla facing more competition, particularly from BMW, Cramer thinks the multiple could eventually leave the stock vulnerable. "I can't make a valuation case for Tesla. Although fans of the cars, and by proxy the company, could certainly drive shares even higher, I'm OK with it going higher without me."
Amazon: Although Cramer views Amazon as an exciting company, he worries that the Street may no longer have the patience to reward the stock for growth, especially if other retailers generate strong profits. "I just can't make a case for owning Amazon, because it trades on a multiple of sales, not profits. In this market, that's an expensive stock."
Software as a service stocks: Cramer is a fan of good software-as-a-service companies, including Concur, ServiceNow, Workday and Salesforce.com because he believes the cloud is a long-term theme that could disrupt the entire technology sector. "I think you can own one of them. But you must recognize that you are buying them at speculative levels, with Salesforce.com being the cheapest—but not cheap—within the confines of the broad S&P 500."
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Netflix: "I still like Netflix," Cramer said, but he noted the stock trades on sign-ups per share and not earnings per share. Because Cramer worries the Street may not reward a stock with an already lofty P/E of 165, "I like it more as a takeover target than a fundamental play."
Google, Facebook and Apple: Cramer said that all three of these companies are buys because they fit his parameters of strong earnings growth, good sales growth and fair valuations. "Looking out a couple years, I don't think the stocks of Google, Facebook or Apple are expensive at all." And Cramer isn't just talking the talking, he's walking the walk. "I own all three for my charitable trust."
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