Technology: The Forgotten Sector
The market was up Monday, and although Cramer isn't complaining, he admits that something was missing... something investors have come to expect from this year's rallies: tech did not lead the move higher. Several sectors - industrials , health care, retailers - fueled the market higher, but the tech sector, despite what Cramer calls "spectacular news" coming from key companies, remained somewhat muted during Monday's trading.
This situation dumbfounds Cramer, especially since he sees a "once-in-a-generation" product cycle emerging in the smart phone space, a situation that he perceives to be a potential web of interconnected corporate success. Take SanDisk for example, which is up big after it pre-announced an upside surprise and Skyworks, which raised guidance... it's hard to believe that people don't have faith in these sorts of companies, and the space in general, Cramer says. He also pointed out that although a stock like Apple may look expensive around $200, its P/E ratio still signals that the company is worth picking up, just like a wealth of other tech companies about which many retail investors have an unfounded aversion.
With this unmistakable product cycle accelerating, Cramer sees this mentality as counterintuitive, especially when money is being put to work in other, potentially less promising industries. He points out that the knee-jerk reaction of investors in other industries is to buy into the obvious beneficiaries of good news, but that's not the case in tech. "When you hear good news about Ford auto sales, you know that Magna, Johnson Controls, Lear, BorgWarner and TRW will move up, and move up fast," says Cramer.
Cramer reaffirms his conviction that tech, especially the smart phone space, is the place to be, as these devices are becoming more and more a necessity for the American consumer, from the use of Facebook and social media games to the need for constant communication, this is where big growth will be focused. As a result, Cramer sees emotions, fear and a lack of enthusiasm has created a situation where the tech space is littered with inexpensive stocks that are growing faster than the average business.
What's the bottom line? Endless skepticism of the tech space is synonymous to endless ignorance, and there's no reason tech should not have led the rally on Monday. Cramer thinks that if you have a tech aversion, get over it, and buy into the stocks before the masses realize that tech is the place to be.
Cramer's charitable trust owns Apple and Johnson Controls.
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