CNBC's Jim Cramer told investors why he's still pulling for Apple, even as its stock lags behind the averages.
"If Apple can shake off its current shroud of negativity — maybe they make nice with President Trump somehow — I could justify paying 35 times earnings for the stock," he said.
"Which is why I'm simply not ready to give up on this one.
"In this articleAAPL your favorite stocksCREATE FREE ACCOUNTwatch now2:1502:15Apple has been trading sideways for the past month or so, says Jim CramerMad Money with Jim CramerCNBC's Jim Cramer on Friday told investors that he's still pulling for Apple, even as its stock lags behind the averages.
"If Apple can shake off its current shroud of negativity — maybe they make nice with President Trump somehow — I could justify paying 35 times earnings for the stock," he said.
"Which is why I'm simply not ready to give up on this one. "Cramer said he understands the current lack of enthusiasm for the iPhone maker.
President Donald Trump is slapping steep tariffs on China, where Apple does the majority of its manufacturing.
Trump has also said the company would have to pay a tariff of 25% or more if it were to make smartphones anywhere outside the U.
— thwarting Apple's plans to dodge the new regulations by moving manufacturing to India.
Some analysts have said domestic manufacturing would raise the cost of an iPhone by at least 25%, with one estimating a U. IPhone could sell at $3,500.
Apple's recent Worldwide Developers Conference didn't "yield anything ground," Cramer continued, especially related to artificial intelligence.
The titan also gave "tepid" guidance when it reported earnings last month, he added, and some on Wall Street are concerned as litigation regarding the App Store continues.
However, Cramer said he's willing to stick with the company despite this uncertainty.
He said he has faith in CEO Tim Cook, adding that tough times for Apple in the past have always ven to be great buying opportunities in hindsight.
He reviewed the stock's performance over the past several years, noting that it has rallied hard after hitting bottoms.
Cramer also said it's important to avoid looking at Apple's price-to-earnings multiple in a vacuum, saying investors should factor in its earnings growth rate.
Money managers will pay up for growth, he continued, and he said Apple is expected to put up 14% earnings growth in the current calendar year.
Meanwhile, he added, the S&P 500 as a whole is set to grow at a 9.
"There's ly a point where Apple's stock becomes too cheap to ignore, and recent history says that's around 25 times earnings…that means down 20 points from here," Cramer said.
"I certainly don't want to see it revisit that level…. But if for some reason the stock gets clobbered, you know what, let's back up the truck at $180.
"watch now9:3509:35I think Apple stock is just plain out of favor right now, says Jim CramerMad Money with Jim CramerJim Cramer's Guide to Click here to download Jim Cramer's Guide to at no cost to help you build long-term wealth and invest smarter.
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