Palantir or Deere? Cramer says investors may need to rethink overpriced tech and look for value

Published Mon, Feb 22 202110:52 AM ESTUpdated Mon, Feb 22 202111:14 AM EST

CNBC's Jim Cramer said Monday that investors should reconsider stakes in relatively expensive technology companies in favor of cheaper investments in traditional companies that are riding the economic recovery. Cramer cited Deere , which rallied last week on fiscal first-quarter earnings well ahead of estimates, versus Palantir , which trades for 26 times sales. "Deere reported a quarter that was unexpected and the stock went up 30 points. When you get these mainstream value stocks like Deere up 30 points, isn't that better than owning like — let's just pick Palantir?" Cramer asked of "Squawk on the Street" co-hosts David Faber and Carl Quintanilla. "You get a company that is selling at a huge amount times sales and then you get a company like Deere, which is just a fabulous company," Cramer continued. "And you say, 'Why do I need the 20 times sales?'" of Palantir. The positive remarks on Deere came less than a week after the machinery manufacturer reported per-share profit of $3.87, compared to a consensus estimate of $2.14 a share. The company also increased its full-year earnings outlook amid improvements in the agricultural and construction sectors. Deere's stock is up 6.4% over the last week and 67% over the last six months. Cramer said that part of Deere's recent financial strength is thanks to the booming housing market in the U.S. "When you look at the makeup of what Deere's doing, it's housing, construction, forestry," he said. "The housing market is so strong that it's carrying a lot of companies with it." By comparison, tight-lipped data firm Palantir is a riskier bet based on the company's youth as well as its comparatively rich valuation. Though its technology and analytics software has proven invaluable to both government and corporate clients, Palantir said in its earnings report last week that it expects a revenue deceleration later this year . Should that happen, the ratio of Palantir's stock price to its sales could look high and cause some investors to balk at the richer valuation. Still, it remains a popular stock among retail traders on social media site Reddit as well as with some prominent investors like Ark Invest's Cathie Wood . Despite price weakness since its earnings report a week ago, Palantir stock is up almost 60% over the last three months.

Jim Cramer on CNBC's Halftime Report.

Scott Mlyn | CNBC

Cramer cited Deere, which rallied last week on fiscal first-quarter earnings well ahead of estimates, versus Palantir, which trades for 26 times sales.