Technology has affected almost every industry and one subgroup is transforming the back end of business operations.
Cloud computing is a secular growth issue in recent years that has been one of the hottest parts of the market, yet the average person "can't explain what the companies that make up the group actually do," CNBC's Jim Cramer said Wednesday.
The Mad Money host has crowned a number of his favorite stocks in the sector under the so-called "cloud king" and risky "cloud prince" umbrellas, but recommends that investors only own companies for which they have done their homework.
"There are a lot of good opportunities in the sky, but if you are going to own these shares, you have to understand what these companies are actually doing, and that's why we run the entire cloud primer series," he said.
Cramer broke down and gave recommendations for 1
One of the shares in the "cloud king" cohort, Splunk focuses on combing through, combining and making sense of machine data that runs through the connected device r.
"CEO Douglas Merritt is a superb manager and in a business that is pretty cut his throat, you know, I've never heard a word that was bad about him. He is loved, "said Cramer.
Alteryx is a fast-growing business intelligence game. The subscription-based platform serves businesses that want to gather and analyze large amounts of data from multiple sources. have pledged almost 7 points in Wednesday's trading day to close over $ 142 apiece. "The numbers here are just amazing, but I won't chase those levels. You have to wait for a backlash for Alteryx, "said Cramer.
ServiceNow is another of Cramer's Cloud King members. The company develops labor-saving technology that helps businesses produce digital workflows and run leaner businesses. The stock is more than 12% off the peak in July, although the company delivered better results than expected in its recent quarterly report.
"I like ServiceNow at these levels, and I'm not the only one. The stock got an upgrade from Stifel this morning, and it exploded higher, up 4% today," the host said. "However, it has room to run."
Cramer replaced Red Hat for Twilio in its "sky king" group after the former was acquired by IBM earlier this year. Twilio is a cloud-based service that wants to improve how call centers work to include bots and automated voice systems. Companies like Airbnb and Lyft use the platform to communicate with customers via voice and text messaging.
The stock is down nearly 13% since late July, but "this story is better than it was a month ago," Cramer said.  Shares closed Wednesday at $ 131.06, up nearly 47% from the beginning of the year.
Atlassian is a communications software company that helps software designers collaborate and develop applications. The company owns a bucket of teamwork products such as Jira, Confluence, HipChat and Bitbucket.
Cramer said that investors must spend a lot to own a piece of Atlassian here. The stock is under $ 144, and is about 5 points off the high time it set in late July.
"I wouldn't buy it at those levels, but I certainly wouldn't sell the entire position if you owned it," Cramer said. "If you don't, wait for a real retreat. It's okay."
HubSpot focuses on inbound marketing. The company provides Business Hub, a free customer service platform used to manage customer relationships. HubSpot offers a variety of targeted marketing, promotions and sales services that clients must pay for.
The stock climbed to a high of $ 204.26 during the session before ending the day below $ 200.
"I think it's too late to buy this, but if you can get a nice retreat, it's definitely worth owning," Cramer said. "Although it did setbacks, I would bet that someone would buy them. A real company. It's on the buying list for every single growth rate manager out there."
New Relic offers a variety of services to help devices collect, store and analyze real-time software data. Businesses use the company software company to run and troubleshoot their sites. Shares held close to 30% on a day earlier this month following weak guidance that management showed shareholders in its latest quarterly report.
The company has lost almost half its value since the end of July.
"Now I'm a big believer in CEO Lew Cirne, but you know we had to hear from him before I said," buy New Relic, "Cramer said.
Five9 develops cloud software aimed at increasing physical call centers. The platform allows workers to conduct telephone operations anywhere, including homes.
Equity is up nearly 46% this year, ending Wednesday's session at $ 63.79 per share.
"Five9 is another one on fire. I do not recommend chasing it," the host said. "Again, put it on your shopping list and wait for withdrawal."
RingCentral offers companies a cloud-based telephone system that does so without wires and is dependent on the Internet. The platform includes collaborative communication through voice, video, messaging and conferences.
The stock is trading at about $ 140 after gaining almost 70% in 2019.
"Again, the last quarter was fantastic. The stock has been on fire. Don't try to chase it, wait for a better opportunity," said Cramer.
Zendesk is another software company that offers businesses customer support services through phone and text messaging. Cramer noted that the company is entering the data analytics room.
While the company met expectations in its latest quarterly report, the stock fell. The stock price is down by almost 14% since the end of July.
"Zendesk seems to have set a bottom here, and this is one of the few cloud stocks that I would recommend buying right now," Cramer said.
Appian provides software designers with a platform that simplifies the coding process. The company is known as low code and helps companies develop tools that require less coding. Cramer noted that the stock is a delayed group, but said it is emerging as one of the best performers.
"With the stock up more than 50% in less than a month," Cramer said he can't recommend chasing it.
SE: Cramer drops shares in cloud space
Disclosure: Cramer's charitable trust owns shares in Twilio.
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