We must never get used to greatness. When we do we begin to dump or even short stocks because we think the companies are static or clueless about their destiny. No companies suffer more from these dismissals than those who make up FAANG + M, my acronym for Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) , Google (Alphabet) (GOOGL) and Microsoft (MSFT) . These companies are so often written off for being has-beens or yesteryears or just plain exhausted dinosaurs known now more for government inquiries than originations.
But I would submit such an indictment is unfair at best and totally myopic in vision for these companies.
Now some of these companies' moves do seem, at times, to be quizzical. When you spend $8 billion on a theatrical production company as Amazon just did to buy MGM, it does seem like a headscratcher. I do think Amazon has failed to scale in entertainment and this could help. It would be nice to ask Alexa to put on "Goldfinger", but MGM is not known for its great productions. Still it's a rounding error and maybe they have something that can make it more worthwhile than we see. They certainly need to do something in sports or gaming because they are squandering their NFL rights by having nothing special surrounding the programs. What a miss.
But then you get some little noticed things out of FAANG that should take your breath away and keep you in a stock like Google, which has advanced 36% this year and I think has much more room to run considering that it sells at only 27 times earnings and that's before you back out the $135 billion in cash.
Case in point: a story that broke this morning in the Wall Street Journal about a deal Google struck with HCA Healthcare (HCA) , the giant national healthcare chain, to create algorithms from patient records to help make health care more logical, rigorous, better and most likely, cheaper. I have been waiting for Google's healthcare division to do something big and this is huge. The patient data will be stripped of identity so HIPPA won't destroy it. There's so much data now available that can be stored in the Google cloud and be analyzed to develop new treatments and create new medicines without humans having to be guinea pigs.
Now I know that when IBM (IBM) tried to do Watson by gathering all sorts of records it had a similar vision. But it was not able to pull it off even as I thought the idea would have been fabulous. The gathering of data when married with artificial intelligence failed to reinvent healthcare, perhaps because the goals were so lofty but the buy-in from health care professionals just didn't take place.
This program is the opposite. It's as if Watson landed the biggest client and is now going to use artificial intelligence to help that client do a better job treating patients, not solving cancer or developing new medicines, although that can come of the venture. The great thing about Google? Unlike IBM? It isn't trumpeting anything. It's just talking about algorithms, let the eyes glaze over.
I have been waiting for Google to do something big in healthcare besides partnering with DexCom (DXCM) for diabetes information.
I think this is the beginning of something big. When it happens people will say, "How did they do that, it's incredible." Why not buy it now before others realize that FAANG's a moving target and this HCA deal is more transformational than anything I have seen in healthcare since Microsoft announced its colossal deal with Nuance (NUAN) , again, to gain access to hospital data.
(Facebook, Amazon, Apple, Alphabet (Google), and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)