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Cramer: The secret to Accenture's sauce

Jim Cramer's No. 1 rule to investing is to know what you own. In many cases it is easy to know what a company does. But sometimes, it is not always easy to understand what is really happening with a company.

Accenture is a company that is often described a consulting play or an outsourcer for information technology. It helps other companies upgrade systems to embrace the cloud, mobile technology and advanced data analytics.

But what the heck does that mean, and how the heck has the stock roared 8 percent since the beginning of the year?

"I consider Accenture to be a fabulous company with a stock that is absolutely worth owning, but you absolutely cannot own it if you don't understand it," the "Mad Money" host said.





Secret sauce
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"I think a big part of the secret sauce here is that Accenture offers its customers a fairly unique value proposition." -Jim Cramer

When investors buy a stock just because it is going up, they run the risk of not knowing what to do when it starts to pull back. And eventually all stocks pull back, which is why homework is important.

That is why Cramer dug a little deeper to clarify what Accenture is up to, in order to determine what to do with the stock.

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Essentially, Accenture uses its expertise to help clients figure out how to use and respond to technology. It also provides outsourcing to help roll out and manage that technology.

Cramer found it interesting that IBM does many of the same things, yet in contrast to IBM's long-term performance, Accenture has consistently been an outperformer.

"I think a big part of the secret sauce here is that Accenture offers its customers a fairly unique value proposition," Cramer said.

Accenture is a one-stop shop for a company that wants to use technology to become more efficient and grow its business. On the consulting side, it tells clients what to do. And on the technology and outsourcing side, it can do it for the client.

Put another way, Accenture worries about the changing technology landscape, so that its clients do not have to.

And if the dollar continues to decline versus other major currencies, as Cramer thinks it will, that will also provide a huge boost to Accenture's earnings since 54 percent of sales come from outside the U.S.

"I think the stock has more room to run, although, ideally, I think you wait for a pullback from these levels before you start buying," Cramer said.

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