Mad Money

A Tech Giant That's Ready To Move

Google has made its stockholders a lot of money since its 2004 IPO. Priced at $85 for its contrarian Dutch auction, shares have surged past the $500 mark on the back of an accelerating growth rate of as high as 90% at times. But the stock has stalled lately, dropping back to almost the mid-$400s.

Momentum investors are selling, and potential buyers are watching from the sidelines for the stock to hit the right price. Cramer still believes that Google shares will reach $600, but not until they dip low enough to make the run-up worthwhile. So there’s no reason to own Google stock now.

But that doesn’t mean there aren’t worthy internet stocks to own. Yahoo! , which Jim’s charitable trust owns, looks good for two reasons: Fidelity is almost done selling it, and Legg Mason is buying it. In Cramer’s latest book, Watch TV, Get Rich, he says that following huge, institution-sized trades like these can often times make you mad money.

The negative pressure in the stock will clear once Fidelity is completely done selling, Cramer says, and Legg Mason, which recently upped its holdings to 5.4%, will give it much-needed positive pressure. If Legg’s stakes in and IAC InterActiveCorp are any indication, holdings in Yahoo! could end up being as much as 17%.

Maybe this isn’t reason enough to buy the stock, but there are positive fundamentals to consider also. Yahoo! has rolled out its new Panama search advertising system, which should take some market share from Google. The company has also lowered its guidance twice in the last four months, and that takes a lot of the downside risk out of the stock.

And, hey, Hall of Shame member Terry Semel could always resign (for personal reasons) tomorrow, and that might send the stock up a quick five points.

Bottom line: While Google’s stalled out on the side of the road, investors need new internet plays that can move. Yahoo!’s one pick from Cramer. Check back for two more.

Cramer’s charitable trust owns YHOO.

Questions? Comments?