CNBC’s Jim Cramer said Thursday he believed investors should buy shares of Amazon and other corporate giants that have the pricing power of their consumers.
The host of “Mad Money” said the current inflationary environment, with numerous companies raising sticker prices, could help investors “separate wheat from straw”.
“When you try to think about what works in this market … I want you to ask yourself if I wouldn’t be sensitive to a price increase if the company did?” Cramer said. “Companies that can raise the price without getting angry? Go buy their shares.”
Amazon is firmly on that list, Cramer said. Shares of large e-commerce have fallen just over 2% to date, but Cramer said many on Wall Street are misjudging Amazon’s ability to flourish in a post-pandemic environment.
“We’re finally going to start remembering that we love Amazon because Prime is a robbery,” Cramer said. “I think the idea that Amazon Prime is a pandemic story is wrong. It’s a game in our instinct to get more for less. That’s Amazon, and that’s why … it’s a purchase.”
Cramer said Microsoft is another company with customer loyalty, especially companies. Look no further than its stock jumped 2% on Thursday, setting a new record, after announcing it would raise the prices of commercial subscriptions to the Office 365 package, which includes Word and Excel.
Cramer said Apple is a field similar to Microsoft, although overall, the iPhone maker is seen to have more exposure for consumers. Still, the host said that “unlike a price increase at the grocery store (totally outrageous, right?), It doesn’t feel very encouraging about paying more for Apple. That’s a big reason why stocks they are so close to the maximum of 52 weeks, and why I always tell you to own it, not to change it. ”
The last two companies Cramer pointed to are wholesale retailer Costco and video streaming colossus Netflix. In the case of Costco, Cramer said buyers recognize that the cost of subscribing to the store unlocks tons of value.
“If you use this analysis, the analysis of a company that offers you an amazing business that you will be willing to pay for, or a business in which you are not even aware of the price because it is a theft.” brings investors to Netflix, Cramer said.
Disclosure: Cramer’s charitable trust has shares in Apple, Amazon, Costco and Microsoft.