Cramer: Emphasis Is on the Long A in FAANG

 | May 01, 2017 | 11:47 AM EDT
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Cramer: Emphasis Is on the Long A in FAANG

Apple is moving at the same clip as the other 4 stocks.

No, it's not me out here. I am talking about the surge in the FANG stocks and how they just won't quit.

It almost feels like there is a surge in money for these stocks, yet they aren't in any sort of real ETF and the acronym is something I coined when I was exasperated that these were the only stocks that were getting money in for ages.

Now, of course, we have to deal with the idea of the longer way to say FANG -- FAANG, because Apple (AAPL) now has the same clip in its step as the others.

I can't say I am fond of Facebook FB zooming up ahead of reporting on Wednesday. We have all lived through the "disappointing" Facebook quarters that weren't disappointing at all but the stock gets hammered anyway. Some of that is very simple to understand: CEO Mark Zuckerberg is always up front about spending -- he spends to win -- and he is upfront about the viewer experience -- he seems to favor the readers inordinately over the advertisers. There's never a sense on the call that investors come first.

Of course, we know Zuckerberg's philosophy isn't all that different from Apple's view: You build the best product and user experience and they will keep coming back. Why this philosophy is such a mystery to people mystifies me. When you consider how much the stock moves intraquarter, you would think there would be more reluctance to sell.

However, I also am leery about the insider selling that has occurred in this stock post-earnings. When brokers get those orders, they tend to tip their hands and it makes those in the know more fearful to buy.

Then you get the cascade.

Amazon (AMZN) had a quarter that I loved, but if you recall, there was selling pretty much all afternoon after a very big run. It was almost as if someone knew something that would come out this weekend, and then nothing came out so the buying resumed.

It was a terrific quarter, one where I felt the company couldn't hide its profitability even if it wanted to. That's an amazing sign because the company is expanding like mad. It's hard to figure if the stock is "expensive" because it doesn't trade on those earnings. However, I like the idea that the future still belongs to the company, not the Wall Street analysts, because they don't cater to Wall Street and I think they don't really care what Wall Street thinks.

Sometimes I feel Netflix (NFLX) has a similar attitude. On every conference call, there are these endless questions about competition and the denouement of Netflix because of it.

Every quarter CEO Reed Hastings is patient and understanding, but his "the more the merrier" attitude about Time Warner's (TWX) HBO, or CBS' (CBS) over-the-top offerings or Comcast's CMCSA plans or about Amazon's filmmaking just always leaves them wondering. This time, when asked about competition, a seemingly exasperated Hastings said "sleep." That's right, the idea that the only limiting factor for growth is how much people sleep.

I thought the company really held back on all its initiatives and the stock could still be moving up on the Chinese partnership that came about rather unexpectedly. Netflix called the deal with a Baidu (BIDU) affiliate "modest in scope," again assuming the magical posture of under-promising and over-delivering, but the stock hasn't quit ever since the announcement.

There's another aspect that has the stock of Netflix ramping endlessly: takeover talk. Apple reports tomorrow and there is a sense that Netflix's $67 billion market cap is still bite-sized when it comes to the $250 billion cash hoard the giant has. Let's put it this way: Apple has had ample time to consider buying Netflix to augment its service stream revenue -- the key to having investors pay up for an otherwise hardware model that is always viewed skeptically. If Apple hasn't moved yet, do people really think it is just a matter of time?

The other rumor, and I am not going to dignify it as anything but a rumor, is that Walt Disney (DIS) is going to buy the company and install Hastings as CEO of Disney. He's 10 years younger and there still is no valid secession plan for CEO Robert Iger, who has done such a remarkable job steering Disney through the digital era but can't be there forever.

Here the scuttlebutt says Disney's ready to spin off ESPN and take in Netflix with a simplified structure less levered to cord cutting. The layoffs at ESPN solidified the chatter.

Again, I think, what's the point of this? Iger has people thinking about ESPN as a digital offering and the Street seems to have moved on from the oppressive focus on subscription compression even as we have to believe that at some point the carriers demand cuts in what they pay, causing the crunch that the cognoscenti fears.

I think Iger will leave well enough alone, and the only thing that keeps me from just putting a dagger into the heart of the rumor is the frequency with which the narrative keeps appearing.

You would think Alphabet (GOOGL) could take a breather after that breathtaking run from $895 to $925, but it turns out the stock just didn't get as far as it should have after a remarkable quarter where the other segments of the company, particularly the service cloud, have emerged as viable supporters of a higher price to earnings multiple. (Apple, Comcast and Alphabet are part of TheStreet's Action Alerts PLUS portfolio.) 

The quarter was a food-for-thought experience where your assumptions about Google being an advertising-supported company and therefore bounded by the $600 billion in total addressable market for ads, rather than an online store, a computer maker, a cellphone operating system, a carrier of a billion hours of programming a day waiting to be more heavily monetized, an autonomous-car leader, and a true rival to Amazon Web Services were totally and successfully challenged.

Oh, and I am not even considering the $100 billion cash hoard that the company's got, enabling a potential transformational acquisition and/or humongous buyback.

Finally, there's the stretched A of FANG -- Apple, where the buzz is how can you not be in the stock ahead of the supercycle Apple iPhone 8 and potential deployment of its $250 billion cash treasure chest.

All I care about is an expansion of the ecosystem that makes me pay even more per month to be part of the Apple club with incredible privileges. Any sign that the revenue stream has the potential to be greater than a Fortune 50 company instead of Fortune 100 -- putting it at about $28 billion -- would cause the stock to run after the earnings print.

So FANG's not back; FAANG's joined the acronym lexicon, and while the spelling is tortured, the story's anything but. 

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