Mad Money

Cramer recommends buying these 17 cloud stocks based on the 'Rule of 40'

Key Points
  • CNBC's Jim Cramer recommended more than a dozen cloud stocks that investors can play in a recessionary environment.
  • The "Mad Money" host determined the stock picks based on the Rule of 40 investment strategy.
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Cramer recommends 17 cloud stocks based on the Rule of 40

CNBC's Jim Cramer on Friday revealed a basket of cloud stocks that he recommends investors can play in this uncertain market environment.

The "Mad Money" host insisted that investors expose their portfolios to software-as-a-service plays that can work in recessionary times using a "quick and dirty" trick called the Rule of 40.

"You add the company's revenue growth rate to its earnings before interest, taxes, depreciation and amortization margin," he said. "If the combination's over 40, you've got a good one. If it's under 40, you've got a riskier one."

Cramer identified more than a dozen cloud stocks that meet that standard. Cloud companies are one of the key payers in the digital transformation.

He did warn, however, that many of the stocks have put up big gains in recent weeks.

Cramer's picks:

Adobe

Chegg

Salesforce.com

VMware

Zoom Video

Livongo Health

Crowdstrike

Veeva Systems

Datadog

ServiceNow

Atlassian

DocuSign

Fastly

Dynatrace

Zscaler

Dropbox

Wix.com

Disclosure: Cramer's charitable trust owns shares of Salesforce.com 

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