Most professional money managers dread the month of October when it comes to investing, but not Jim Cramer.
“Me? I can’t wait until we get to October, that’s how much I dislike September,” the host of CNBC’s “Mad Money” said Tuesday.
Some of Cramer’s distaste has to do with timing. September tends to bring droves of market-wide selling, driven in part by mutual funds that tend to ring the register before the end of their fiscal year in October.
But part of the selling is caused simply by investors’ fear of the month of October, which is only worsened by television doomsayers, Cramer said.
“I’m going to prepare you for September. It does tend to be especially tough on the market’s best performers,” he warned. “People love to take profits on their winners at this time of year. So you should be ready to buy them into weakness.”
What kinds of winners should investors be eyeing? For Cramer, few stocks look more attractive than the market’s most rapid secular growers: the cloud kings.
Cramer’s top recommendations were essentially a who’s who of Cramer-fave software plays: Adobe, Red Hat, Salesforce.com, ServiceNow, VMware, Splunk and Workday.
“These days, everybody’s embracing the cloud to cut costs, improve customer relations, mine insights from data and generally make their business more competitive,” the “Mad Money” host explained. “These are exactly the kind of stocks that should bounce the hardest after a big sell-off.”
Cramer backed these seven “cloud kings” for their long-term growth. Noting that most of them have trounced the S&P 500 year to date, he emphasized how dramatically they benefit from the global shift to cloud computing and subscription-model adoption.
And while he felt some of them — namely ServiceNow — were too hot for investors to chase right here, he highlighted Adobe and VMware as “first-round” picks.
In particular, he argued that VMware “has the best growth prospects” because the market is miscalculating how Dell, VMware’s parent company, will handle its shares in the company.
“There’s this widespread but, I think, incorrect belief that eventually Dell will cram down the company’s shares. That’s why I consider VMWare a buy — I don’t think that’s going to happen,” the “Mad Money” host said.
“Bottom line? These are all strong companies riding a giant secular wave that’s still early,” Cramer concluded. “So when you hear ‘buy on weakness,’ you need to think of the cloud kings, and given that this is September, I expect us to get some serious slip-slidin’ that gives you a chance to pull the trigger on any one of your favorite kings of the cloud.”
Disclosure: Cramer’s charitable trust owns shares of Salesforce.com.
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