Cramer’s Cheap Expensive Stocks (GOOG, ISRG, BIDU)

By Douglas A. McIntyre Updated Mar 26, 11:37PM EDT · Published Oct 22, 5:41PM EDT

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On tonight’s MAD MONEY on CNBC, Jim Cramer was touting growth stocks he deems cheap, even though the prices sound high.

Google (NASDAQ:GOOG) is Cramer’s first cheap growth stock. With 34% long-term growth, and some fund managers paying 50-times earnings for that growth rate, his assumption to get to $750 is only 37-times 2008 and he thinks it is cheap and headed higher. Cramer thought he’d have seen $675 if the market wasn’t so bad Friday. It’s also a window dressing stock, similar to the list we recently gave. We also gave our recent "How long until $1,000" question in relation to higher and higher analyst targets.

His second stock that is still cheap is Intuitive Surgical (NASDAQ:ISRG) even at $285 per share. We noted "Bionic Man Earnings" on this one last week. The stock held up on Friday and the momentum investors think it may be over, but they are wrong. He loves the robotic surgery da Vinci device that allows for open heart procedures to be done with micro-incisions and that shortens hospital stays drastically. He also likes the 40% recurring sales after the da Vinci system sales are made for disposable parts and only 17 systems sold overseas last quarter. If you use forward earnings estimates its PEG ratio is about 1.5, and that is cheap for the growth here according to Cramer.

On a call-in, Cramer said that despite the multiples, Baidu.com (NASDAQ:BIDU) shares are heading higher. You’ll have to chase that one on your own. The Alibaba IPO may draw more attention to the Chinese web space, but we noted previous lessons from the dot.com bubble here previously and noted how the stock was fighting to hold $300 recently. This company will have to do much more than just beat its forward earnings.

Jon C. Ogg
October 22, 2007

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.