Jim Cramer recommends 17 cloud stocks based on the Rule of 40

"If the combination's over 40, you've got a good one. If it's under 40, you've got a riskier one," the "Mad Money" host said.

CNBC’s Jim Cramer on Friday revealed a basket of cloud stocks that he recommends investors can play in this uncertain market environment.

The “Mad Money” host insisted that investors expose their portfolios to software-as-a-service plays that can work in recessionary times using a “quick and dirty” trick called the Rule of 40.

“You add the company’s revenue growth rate to its earnings before interest, taxes, depreciation and amortization margin,” he said. “If the combination’s over 40, you’ve got a good one. If it’s under 40, you’ve got a riskier one.”

Cramer identified more than a dozen cloud stocks that meet that standard. Cloud companies are one of the key payers in the digital transformation.

He did warn, however, that many of the stocks have put up big gains in recent weeks.

Cramer’s picks:

Adobe

Chegg

Salesforce.com

VMware

Zoom Video

Livongo Health

Crowdstrike

Veeva Systems

Datadog

ServiceNow

Atlassian

DocuSign

Fastly

Dynatrace

Zscaler

Dropbox

Wix.com

For more coronavirus live updates:
https://www.cnbc.com/2020/06/01/george-floyd-protests-live-updates.html

For access to live and exclusive video from CNBC subscribe to CNBC PRO:
https://cnb.cx/2JdMwO7

» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.

Connect with CNBC News Online
Get the latest news: http://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC

#CNBC
#CNBC TV

Видео Jim Cramer recommends 17 cloud stocks based on the Rule of 40 канала CNBC Television