Why You Should Fear a Stronger Dollar

Now I'm getting concerned about this strong dollar. My thesis for growth in many of the companies I like, including drug stocks, hinges on a weak dollar for them to get a translation gain. Plus, you have to worry about the Caterpillars (CAT - commentary - Cramer's Take) of the world, even the Boeings (BA - commentary - Cramer's Take), because of a strong dollar.

I know this is one of those stories you are never going to read anywhere else, because a "weak" dollar is supposed to be bad and a strong dollar is supposed to be good. But if you know stocks and know the way they trade, you know this is bad news, not good news. You know that when the numbers are reported, you are going to hear number reductions based on this dollar if it continues.

What to do? If you have drug stocks that rely on translation gains for extra oomph -- here, I'm thinking Pfizer (PFE - commentary - Cramer's Take) and Merck (MRK - commentary - Cramer's Take) -- you need to think about taking profits.

I'd also mention Colgate (CL - commentary - Cramer's Take) and Procter & Gamble (PG - commentary - Cramer's Take) as possible trouble spots. While you're at it, add Kellogg (K - commentary - Cramer's Take) can be added to the worries.

I am in Johnson & Johnson (JNJ - commentary - Cramer's Take) for Action Alerts PLUS and I would be more worried ahead of the Jan. 23 report if J&J hadn't bought Pfizer's over-the-counter drug unit, because that gives J&J the chance -- which I think management will take -- to guide up.

And if Altria (MO - commentary - Cramer's Take) weren't breaking up -- perhaps as soon as the end of the month--I would be worried there, too.

Caterpillar? Cheap stock, but a real concern. I would lump in that I am worried about United Technologies (UTX - commentary - Cramer's Take) for the same reason as Caterpillar: Both are very big overseas.

Focus on this strong dollar. Understand why it isn't good. Companies with more than 50% earnings from overseas could be a real problem.

You have been warned.

At the time of publication, Cramer was long Johnson & Johnson and Altria.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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