Mad Money

Cramer’s high quality cloud stock


Right now cloud stocks are out of favor. But they won't always be that way. And if a cloud company is a good company, Cramer thinks there's no time like the present to get your arms around the future potential.

Take, for example, .

"It's a cloud-based firm with an easy-to-use platform that allows IT departments at large companies to develop their own internal applications," Cramer explained.

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Because most big companies need to customize computer programs, Cramer thinks the opportunity facing ServiceNow should be substantial.

"I believe the addressable market is $12 billion," he said.

And although ServiceNow has competitors, Cramer thinks it's likely to win a sizable chunk of new business.

"They have superior technology, superior customer service, and more important, the total cost of ownership for their software is 50% cheaper than the competition. In short, they've built a better mousetrap at half the cost," Cramer said.

Typically Cramer is a buyer of solid companies such as ServiceNow, especially when growth prospects are so impressive.

However, this isn't a typical environment for cloud stocks.

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"The stock market currently despises super fast-growing companies like ServiceNow that are not yet profitable and trade at sky-high valuations relative to their sales," Cramer said.

Although the sentiment will surely shift, it shows no signs of shifting immediately. Therefore Cramer thinks ServiceNow is a stock to keep on the radar; one that you should watch closely but only buy strategically, when the time is right.

Again, use this time to get your arms around the business and understand what lies ahead. Then, determine an appealing point of entry. "ServiceNow, like all the cloud names, is a broken stock. But it is not a broken company," Cramer said.

*Disclosure: On Thursday April 24 Jim Cramer owned ServiceNow on behalf of his charitable trust
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