CNBC’s Jim Cramer on Thursday gave investors a list of eight software stocks to keep on their shopping lists going forward.
“I firmly believe it’s far too early to buy some of these stocks. … But eventually even these vile stocks, formerly high-flying tech stocks, will become so cheap that they will find a bottom,” according to the “Mad Money,” the moderator said.
“Although I don’t see that happening until now [Federal Reserve] is further along in its tightening cycle – and it’s only just begun – these things tend to creep up on you. They happen when you least expect it,” he added, citing the Fed’s plan to implement a series of rate hikes and tighten its balance sheet to offset inflation.
Cramer’s comments come after the tech-heavy Nasdaq Composite fell 2.07% on Thursday. The Dow Jones Industrial Average slipped 1.05%, while the S&P 500 fell 1.48%.
To create the list of investable software stocks, Cramer looked for companies that met the following two criteria:
This method helps weed out the profitable companies from the unprofitable ones, which is crucial in the current market, Cramer said.
“The market … has no patience with companies that are not making money. No matter how fast you grow, unprofitable businesses have become untouchable,” he said.
Here’s Cramer’s list of eight future technology purchases:
Cramer qualified the final two recommendations on the list with a warning that he’s not as familiar with them as he’d like to be.
“Unlike the other names I’ve mentioned, these two are only profitable on an adjusted basis. If you use GAAP numbers, Clearwater just breaks even and Definitive Healthcare loses money. So I want to take a closer look before I bang the table on both, but I think I need to do some homework now,” he said.
Disclosure: Cramer’s Charitable Trust owns shares in Salesforce.
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