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Cramer makes the case for tech based on these 2 shortfalls

  • Jim Cramer finds tech to be one of the market's more reliable sectors.
  • Using Nike's shortfall as an example, Cramer makes the case for investing in tech.
  • Pesky downgrades of names like Alphabet only present buying opportunities, he said.

As sellers continued to drive the technology stocks lower on Thursday, Jim Cramer wanted to right the record and make the case for the sector.

"It might be worth remembering why we used to like tech in the first place, and why, despite what you see and hear, maybe you shouldn't give up on it so easily," the "Mad Money" host said. "Despite the fact that so many people are worried about the valuations of technology stocks, you need to take a look at what else is out there to see why, maybe, tech's a little more special than you think."

First, Cramer turned to the stock of Nike, which slid today on news that the company would cut roughly 2 percent of its workforce in an effort to create a faster product pipeline.

What was once an unstoppable force is now seeing increased competition on price, style and endorsements from Under Armour and Adidas as the sneaker business grows more crowded.

Watch the full segment here:

"Nike's so well run that for a while it didn't even matter. Its expansion in Europe and China was so flawless that it just kept chugging along," Cramer said. "But you know me, I preach 'buy and homework,' and the homework in the last few quarters showed that Nike had lost its edge in the United States."

Despite the fact that a 2 percent cut in a 70,000-employee global workforce is not huge, Cramer said it was an acknowledgement that even the best-of-breed apparel players are struggling, too.

Or take Nucor, a top dog in the steel industry and the largest steel producer in the United States. On Thursday, the company pre-announced a weaker-than-expected quarter, the first inkling of weakness Cramer heard from the company in a while.

"Now, I know Nucor as a conservative, a true under-promise and over-deliver company," Cramer said. "I hope that when it talks about a hotly competitive environment, it's referring to the endless dumping that we see from our trading 'partners,' the Chinese and the Koreans, who maybe our embattled 'president' will do something about. Nucor could be a big winner if President [Donald] Trump would become a little more like candidate Trump for more than just coal."

That said, Cramer's charitable trust, which readers can follow at ActionAlertsPlus.com, owned shares of Nucor, and he said the shortfall stung.

"Now, look, on any given day we're going to have shortfalls in this market. We have stories that resonate negatively and give you the sense that things are falling off a cliff, including tales of trading woes from the major banks, stories of brutal price cutting in the malls, and of still-lower numbers for the department stores," Cramer said. "But you know what? You know where those shortfalls don't seem to be coming from (at least not yet)? Tech."

While the high-growth technology stocks, FANG — Cramer's acronym for the stocks of Facebook, Amazon, Netflix and Google, now Alphabet — included, have been losing some of their gains recently, one thing they always deliver on is their numbers, the "Mad Money" host said.

For example, Canaccord Genuity's downgrade of Alphabet because of the stock's "stretched valuations" was more of a buying opportunity to Cramer than anything else.

"If the stock market sentiment switches, then I think you'll recognize that Alphabet's giving you the consistency that Nike or Kroger used to give us at a very inexpensive price," he said.

Cramer said he felt the same way about Facebook and consumer tech giant Apple, both of which he said are riding many different, reliable trends.

"Remember that while 'tech' has become a curse word of late, there's a reason why so many clamor for it and come back to it in the end: earnings, solid, raw, organic earnings, the type you don't get shortfalls from, the type you get upside surprises from. That's why, unlike what seems to be the majority of my compadres, I'm not abandoning tech stocks. The tech sector may not be the only game in town, but, heaven forbid, at least they know how to play it," Cramer said.

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