While the devices and ecosystems that enable streaming — think Apple, Amazon, Alphabet and Comcast, as well as smaller players like Roku — are worth considering for some exposure, the streaming service providers are the real long-term winners, he said.
That’s because, when it comes to over-the-top entertainment, the hardware is “not where the big money is,” the longtime stock-picker explained.
“In this business, content is king,” he said.
Cramer’s favorite pick in the streaming space might come as a surprise: The Walt Disney Company.
In 2017, Disney became something of a “poster child for the pain of cord-cutting” as Wall Street fretted about the company’s subscriber losses at its sports network, ESPN, quarter after quarter.
Since then, Disney CEO Bob Iger has been at work reshaping Disney’s offerings, introducing ESPN+, an over-the-top streaming service with live sports and exclusive content, for $4.99 a month, last April. Still on the horizon for the company, which owns a stake in Hulu, is the launch of its own streaming service, Disney+.
“In the end, when it comes to streaming platforms, I believe the best content will win, and Disney’s got amazing content,” he continued. “The stock actually remains cheap; it sells for 15 times earnings. […] I think it’s a buy ahead of what I believe will be a very compelling April analyst meeting.”
The “Mad Money” host couldn’t address streaming without considering the stock of Netflix, one of the pioneers of over-the-top offerings. But while he liked Netflix’s long-term prospects, he worried about the stock’s surge in recent weeks.
“Call me a believer, but understand that if you buy the stock here, you are chasing, and I am a no-chaser guy,” he said.
Cramer acknowledged that some investors might want to play it safer and invest in Apple, Amazon or Alphabet, whose streaming offerings are generally “too small to move the needle,” but remain solid lines of business. Some stock-pickers might want to speculate on a riskier play like Roku, or a “dark horse” like Comcast, which just began offering a new over-the-top interface, he said.
But his favorites remain the stocks of Disney and, in the case of a pullback, the original streamer, Netflix.
“You’ve seen the rise of all these streaming services, so if you want to invest in the over-the-top renaissance, I say wait for a pullback in Netflix or pick up some Disney ahead of that all-important April analyst meeting,” he said.
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com. Additionally, Cramer’s charitable trust owns shares of Apple, Amazon, Alphabet, Comcast and Disney.
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