Why are we seeing rallies amid the wreckage? Because, Jim Cramer says, stocks eventually become too cheap to ignore.
Some stocks have fallen so far, they’ve got nowhere else to go but up, Jim Cramer told his Mad Money viewers Tuesday. Even with seemingly everything going wrong, from interest rates and inflation to soaring gas prices, stocks still managed a strong showing last week and rallied off their lows again Monday. Why? Because eventually, stocks become too cheap to ignore.
Just look at stocks like Amazon (AMZN) – Get Amazon.com, Inc. Report, which has fallen 28% from its highs so far this year. Shares of Amazon still trade for a lofty 45 times earnings, but the company could easily bite the bullet, slash spending, and boost those earnings to make its shares incredibly attractive.
Then there’s Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report, the social media giant that trades at multiples more akin to Coca-Cola Co. (KO) – Get Coca-Cola Company Report and Campbell Soup (CPB) – Get Campbell Soup Company Report than a high-growth tech powerhouse. Investors are totally ignoring the potential of Instagram and the metaverse.
Finally, there’s Alphabet (GOOGL) – Get Alphabet Inc. Class A Report. Google is still the best place to advertise, and in times of recession, it’s often the only place businesses advertise. That kind of staying power makes Google’s current share price dramatically undervalued.
It simply doesn’t make sense to sell great stocks like these, Cramer concluded, especially when there’s nowhere left for them to go but up.
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