CNBC’s Jim Cramer on Thursday gave investors a list of eight software stocks to keep on their shopping lists for the future.
“I’m convinced it’s still too early to buy some of these stocks… But eventually even these atrocious stocks, formerly high-flying tech stocks, are going to get so cheap they’re going to find a bottom,” he said.bad moneysaid the host.
“Although I don’t see that happening until the [Federal Reserve] you’re further along in your tuning cycle, and just getting started, these things tend to sneak up on you. They happen when you least expect it,” he added, referring to the the fed plan implement a series of rate hikes and adjust your balance sheet to offset inflation.
Cramer’s comments come after the tech-heavy Nasdaq Composite fell 2.07%. Thursday. The Dow Jones Industrial Average fell 1.05%, while the S&P 500 declined 1.48%.
To compile the list of investable software stocks, Cramer looked for companies that met the following two criteria:
- Have more than 20% revenue growth
- Have more than 20% operating margins
This method helps separate profitable companies from unprofitable ones, which is crucial in today’s market, Cramer said.
“The market … has no patience with companies that aren’t making money. No matter how fast you’re growing, unprofitable companies have become untouchable,” he said.
Here’s Cramer’s list of eight tech buys for the future:
Cramer cautioned against the last two recommendations on the list with a caveat that you’re not as familiar with them as you’d like.
“Unlike the other names I’ve mentioned, these two are only profitable on an adjusted basis. When you use GAAP numbers, Clearwater is only breaking even and Definitive Healthcare is losing money. So I want to take a closer look.” up close before I hit the table on either one, but I think I have some homework to do now,” he said.
Disclosure: Cramer’s Charitable Trust owns shares of Salesforce.
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