GO
Loading...

From Cramer’s point of view, a great trade

(Click for video linked to a searchable transcript of this Mad Money segment)

Although Cramer believes a position in this stock is extremely speculative, he also says "those who buy the stock will probably get to reap the benefits of a truly explosive quarter."

Therefore, if you're thinking about establishing a position in GoPro, you probably shouldn't buy until you've come up with a strategy to sell.

In the near-term, despite the massive gain since its IPO, Cramer can see shares going even higher, largely due to the novelty and excitement surrounding these relatively small, point-of view, cameras.

With a popular model selling for about $199, Cramer believes the gadget is affordable enough to capture the imagination of more than big sport enthusiasts, who might mount a GoPro to a surfboard and then ride a wave to shore.

In fact, Cramer says he ordered one, himself, "so I can see through the eyes of Bug and Everest, my two dogs, a pug and a mutt. Why not? This stuff is as cool as all get out."




Cyran Cunha | GoPro | Facebook

Believing many people will share his enthusiasm for this kind of footage, the "Mad Money" host thinks sales growth could be substantial. "This company is transforming "from a camera for the selfie generation to a content enabler."

However, owning any stock is about more than sales. It also involves the P/E ratio, and in the case of GoPro, Cramer doesn't think the current 53 multiple will be sustainable over the long-run.

"Even Piper Jaffray (among the biggest GoPro bulls) admits that there could be competition coming down the line and the gross margins may not stay as high as they are right now," Cramer said. "And, I also don't know if many will buy more than one," suggesting sales could spike and then fall off significantly.

If sales ultimately decline, at some point in the future, Cramer thinks enthusiasm for the stock will decline too, and GoPro will selloff.

-------------------------------------------------------------
Read more from Mad Money from Jim Cramer
Game plan: Apple and other Cramer plays
Unusual crosscurrents confuse markets
2 private equity takeover targets
-------------------------------------------------------------

In the near-term, however, Cramer thinks the path of least resistance should remain higher. "The first real speed bump could be when lockups expire and the insiders can sell, which is many months away. Until that time, I can see this one as a great trade into the quarter."

According to the Nasdaq, GoPro is expected to report earnings on 07/31/2014 after market close.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book