Jim Cramer says pandemic stocks are back in fashion, but investors should approach with caution.
The pandemic stocks have suddenly caught fire again, but that doesn’t mean you should be buying, Jim Cramer told his Mad Money viewers Monday. Now that Covid appears to be fading into the rearview mirror, investors need to look at the pandemic winners on a case-by-case basis.
Stocks like Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report saw peaks near $170 a share at the height of the pandemic, but has since plunged to just $20. With a new CEO focused on subscription revenue, Peloton is now poised to make a comeback.
That’s not the case with Zoom Video (ZM) – Get Zoom Video Communications, Inc. Class A Report. The video conferencing giant changed everyone’s lives two years ago, but at the end of the day, it’s still just a conferencing tool. Zoom will likely be used a little less as some people return to work, yet the stock still trades for 35 times earnings.
DocuSign (DOCU) – Get DocuSign, Inc. Report and Roku (ROKU) – Get Roku, Inc. Class A Report are two other high-value pandemic names that cannot justify their current valuations. DocuSign is a great tool, but not a great stock at 56 times earnings. Roku trades for a ridiculous 79 times earnings.
Cramer would have been bullish on DoorDash (DASH) – Get DoorDash, Inc. Class A Report, expect the company doesn’t make any money and therefore cannot be bought. Meanwhile, a stock like Shopify (SHOP) – Get Shopify, Inc. Class A Report makes money and can grow into its rich valuation. Cramer was also bullish on PayPal (PYPL) – Get PayPal Holdings, Inc. Report and Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report, which is a heavy hitter in a lot more than just PCs and laptops.
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