×

Cramer Remix: The market underestimates Facebook

Jim Cramer fears investors have both Facebook and Alphabet trapped within the four walls of the advertising canvas.

"Facebook could easily become the world's largest entertainment company, one that is worthy of a far higher multiple than it gets," the "Mad Money" host said.

The same goes for Apple, Cramer said. Analysts who tell the story of Apple are looking at it as if it is some sort of dead end of innovation. Yet they are forgetting that the iPhone device has a steady built-in stream of revenue that continues to grow.

Cramer found this to be reminiscent of Gillette, with users paying a fortune for razors over the span of their lifetime. Hence, Trian, the investment firm run by Nelson Peltz, announced a hefty stake in Proctor & Gamble.

"If we looked at Apple through the same lens as Gillette, it might very well be the best stock a man can get," Cramer said.

Bull and matador
Rafael Marchante | Reuters

Cramer is sick and tired of investors doubting that the stock market could really power higher. It is the real deal, he said, and he decided to prove it.

"It is one of the oldest theories when it comes to stocks that the transports have to confirm the strength in the Dow industrials before you can trust a rally … that is exactly what is happening," Cramer said.

The theory of transports pertains to the notion that the transports group must make a new high at the same time as the Dow for the market to have solid grounding.

Copper is often used as a barometer for the health of the global economy. Naturally, Jim Cramer's interest was naturally piqued when the red metal made a big breakout to the upside recently.

"Copper's strength is part of the traditional metrics that define economic growth and it can be a part of the rational justification for what so many believe is an irrational rally," Cramer said.

When demand for copper increases, that means industrial activity is on the rise because copper is used to make a wide array of things from new factories, to new houses and automobiles.

However, Cramer did note that he doesn't know if demand has increased because there have been major production cuts, which could signal the jump is supply driven rather than due to stronger demand.

Most investors probably don't associate General Electric with technology, but CEO Jeff Immelt is now wagering a bet that it can become a top 10 software company by 2020.

"The proof of the pudding is reality. Our orders are growing 25 percent a year. We are kind of first among equals in the industrial internet. We can play. We can do this," Immelt said.

When GE began investing in technology, Immelt said he didn't do so with the notion that it had to become a software company. Instead, the industrial assets that the company sells are surrounded by sensors and produce a massive amount of data. It was simply an investment to protect its installed base.

Cramer also got the take of the future of digital from Adobe Systems' CEO Shantanu Narayen. Adobe is the leading maker of digital media and marketing software.

Adobe has steadily transformed itself in the last few years into more of a cloud computing play. The company also made strides to enter the red-hot field of artificial intelligence with Sensei, its AI platform that uses machine learning to help computers match images and understand both the meaning and sentiment of documents.

Narayen told Cramer that the future of video also could mean more monetization of the content.

"There is more content that is out there than there has ever been before, and this revival of content when coupled with the appropriate advertising — that is going to be the business model that evolves on the web," Narayan said.