Cramer has said it time and time again—now is the time to invest in tech.
“In nine out of the last ten years, tech has bottomed and begun to inch higher right in the middle of September, he said. “In other words, right now.”
It’s a bottom that looks more like a U, not a V, the “Mad Money” host added.
And because of that, he thinks Avnet is exactly the kind of stock to buy into the tech weakness we saw Tuesday.
The company connects over 300 different electronic component and IT hardware manufactures with more than 100,000 customers, and this is the time of year device makers start ordering a lot of components.
Avnet is selling at just 6.4 times next year’s earnings and has a 12 percent growth rate, so that makes it “too cheap to ignore,” Cramer said. And he likes the company’s recent buyback.
Avnet’s most recent earnings came in slightly below expectations, with a 7 cent earnings beat off a $1.15 basis and revenues that rose 32.6 percent year-over-year. But the company’s earnings guidance for the next quarter was disappointing. However, Cramer said, this is what needs to happen before a bottom. Numbers have to come down low enough so that the company can meet or beat them.
Another negative is the book-to-bill ratio for the company’s components business. It was less than one, meaning it had fewer orders than it had the capacity to deliver. But Cramer expects that to go higher as semiconductor companies begin to prepare for the holiday season.
“(Avnet) is a terrific way to play the seasonal bottom in tech,” he said. “It’s so cheap here that even bad news could take it higher,” he said.
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