Jim Cramer: Apple and Tesla have "more magic in the tank."
CNBC's Jim Cramer believes Apple and Tesla have more room to run despite their recent surge amid the pandemic, according to Markets Insider.
Both companies announced stock splits recently. Tesla is enacting a 5-for-1 split on August 31 and Apple is enacting a 4-for-1 split on the same date. Stock splits help make stocks more affordable for retail investors. Cramer believes these companies can run due to their CEOS. "They're both stocks — and in the end, stocks can break your heart — but if Elon Musk and Tim Cook continue to execute, I bet their long-term trajectory is up."
Tesla shares are up 385 percent year-to-date. The price has been floating around $2,000. Last week, Apple became the first US company to reach a market capitalization worth $2 trillion. Apple shares are floating around $500 per share. "If you judge Apple as a pure hardware play, or you judge Tesla as a pure car company, then you're right, all these moves are all smoke and mirrors," Cramer said.
Despite Apple trading at a high price-to-earnings multiple of 29 times, Cramer believes it is justified given the 10 percent growth rate. Furthermore, Apple's recent quarterly report showed strong revenue, cash flow, and profit growth.
"Apple makes necessities in this digital era. [It] could pull back as many of the owners sell a share of the four to lock in their gains — that's the old pattern — but after the split-induced pullback, you know what, time to buy again," said Cramer.
With regards to Tesla, Cramer said "even after a 1700 point gain, I know Musk has got more magic in the tank."