Discount 'Cushion' Stocks

Every time I hit up a stock -- other than highflying tech stocks and the food stocks -- I marvel at the cheap prices.

I went through the Disney (DIS - commentary - Cramer's Take) downgrade to sell yesterday -- on what are now faulty assumptions as we know from the extraordinary statement management issued after the report came out despite the quiet period -- and I still came away thinking, "Oh my, I can get this incredibly well-run, great brand-named company for 13 times earnings?" What happens when the economy turns, as I think it will by Christmas? You will truly have a winner.

Or how about McDonald's (MCD - commentary - Cramer's Take)? You've got 10% earnings growth, and it's at 16 times earnings. When you throw in that dividend, you've got one cheap stock.

Cramer: Cheap Stocks I'd Buy Now

Or did you know that Procter (PG - commentary - Cramer's Take), a 12% grower with the best dividend history on the New York Stock Exchange trades at only 18 times next year's earnings? All of this with a backdrop of lower interest rates and thus little competition.

How about IBM (IBM - commentary - Cramer's Take), which just reported? You get double-digit growth for 12 times earnings.

Then there's United Technologies (UTX - commentary - Cramer's Take): 12% growth, 14 times earnings.

I point out all of these names because we have to recognize with the Fed now cutting rates aggressively, it is highly unlikely that things will be worse this time next year.

You need to think of these ratios if the Fed does the "wrong" thing and only cuts a quarter of a point. You need to think of them because they are the ultimate historical cushion in a tough time where numbers could be challenged but have not been challenged yet and might improve from these levels this time next year.

Only a full-blown recession worldwide would make these multiples seem big on reduced forward earnings.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

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. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.