CNBC’s Jim Cramer told investors Monday it is time to start buying the stocks of Apple, Microsoft, Amazon and Alphabet, saying the tech behemoths have reached attractive valuations after September declines.
The “Mad Money” host offered the advice following a more than 500 point decline in the Dow Jones Industrial Average, while the S&P 500 gave up 1.2%. The benchmark equity index recorded its fourth straight daily loss for first time since February and is down more than 6% in September.
“This wasn’t day one of the decline, people. We’re now two weeks into a gigantic sell-off and everything’s being thrown away except a handful of lockdown stocks. Better to buy them when they’re down than chasing them when they’re up,” Cramer said. “I just hope you have some cash on the sidelines to take advantage of the weakness.”
Cramer said his charitable trust was putting cash to work Monday in stocks that have been caught up in the September swoon and “finally got low enough to be attractive.” Apple, in particular, has reached an enticing level, he said.
The iPhone maker closed higher by about 3% Monday at $110.08 per share but it is still down almost 20% since its all-time high of $137.98 on Sept. 2.
“I don’t care that it’s up 50% for the year, it has more catalysts than nearly any other stock under the sun: new revenue streams, great balance sheet, stay-at-home economy exposure and, of course, 5G,” Cramer said. “Now that it’s come down from its highs … I think you have to buy it.”
Cramer said he feels the same way about shares of Microsoft, Amazon and Google-parent Alphabet.
Microsoft, which on Monday announced the biggest gaming acquisition in its history, rose by just over 1% during the session. Despite remaining up about 28% so far in 2020, the stock is down more than 10% in September.
Amazon, for its part, is down about 14% during the month after a major run-up in the stock in recent months as the coronavirus pandemic accelerated the shift to online shopping. The e-commerce and cloud giant hit an all-time high of $3,552 on Sept. 2 but closed Monday at $2,960.
Likewise, on Sept. 2, Alphabet notched a record high of $1,726 per share. It is down over 16% since, ending Monday’s trading session at $1,430.
“As someone who turned bearish on these tech stocks weeks ago because I felt like we were getting greedy … I say the tech downdraft now seems like an opportunity, Cramer said. “One thing’s for certain, you sure aren’t buying them at the top,” he added.
Cramer said he sees lessons in the “healthy” pullbacks that have been experienced lately, particularly for novice investors who got into the market during the early days of coronavirus-related uncertainty and were along for the robust rally from late March lows.
“We had an awful lot of people thinking that 2020 was a replay of 1999 when this market just went up, up, up. Turns out it’s not 1999. We didn’t get these kinds of vicious declines that shook out the weak hands back then,” Cramer said.
Yet, he said the declines are actually instructive in a market that will remain influenced by coronavirus concerns and the latest developments in Washington, where lawmakers’ pursuit of additional stimulus to aid the pandemic-inflicted economy grew more complicated by the death of Supreme Court Justice Ruth Bader Ginsburg.
Investors need to remember that for stocks, “when they go down hard … it shakes everybody out,” he said. But, he added, “I think the reversal today … was your key to start doing some buying, not some selling. … The uncertainties, the disarray, the mayhem—it’s not going to go away.”
