Playing the Internet’s Need for Speed

Akamai Technologies is the newest member of the Mad Money Mobile Internet Index, Cramer said on Tuesday. The index, of course, is his proprietary exchange-traded fund, which tracks his favorite smartphone-related stocks, and he thinks AKAM makes the perfect addition.

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This is an Internet infrastructure play, as Akamai’s platform speeds up and improves the delivery of all kinds of content and applications over the Web, including mobile networks. Think: everything from Web sites to streaming video to e-commerce tools. Ever used MLB.com? That’s Akamai. It’s this ever-increasing demand for bandwidth that bodes well for the company’s future, and it’s the reason Cramer likes the stock.

So, too, does Goldman Sachs, which upgraded AKAM on Tuesday. The stock’s up big off that endorsement, but Cramer thinks “it’s got a lot more room to run,” especially because of Akamai’s exposure to the mobile Web.  The June 10 acquisition of Velocitude, a mobile-services platform, will allow Akamai to help websites deliver content to smartphones and other mobile devices, all while dealing with the surge in data traffic.

So what’s the counterpoint to Cramer’s bullish sentiment on Akamai? Well, the Street didn’t seem to like the company’s decision to invest in sales personnel or network infrastructure, which is why the stock sold off after reporting inline results on July 28. But Cramer said these investments should fuel the company’s growth going forward, much like Netflix’s spending did. That stock initially sold off as well, but rebounded $8 on Tuesday, despite the overall negative market action, thanks to a new exclusivity agreement. Cramer thinks AKAM will follow the same trajectory.

Don’t let the 27 multiple scare you into thinking this stock is too expensive. The 16% long-term growth rate, abounding growth opportunities, and a scale that has put Akamai in a “pseudo-monopolistic position,” Cramer said, “make this one is a buy.”

Just be sure to wait for AKAM to pull back a bit before doing so. And that should happen once glow from Goldman fades.

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