Why aren't the futures down huge already? Why, so we hang in each day with this horrible macro environment? That's what I keep hearing when I go out to talk to people. Why the heck, with inflation raging and the slowdown in full force, is anyone buying anything?
And the answer is that lots of stocks reflect lots of bad. We are not talking about stocks selling at 20 times earnings that could be affected by the macro activity; we are talking about many good stocks that sell at between 10 to 14 times earnings that have growth rates in the teens that are not coming down or are only slightly moderating. Heck, in order for the futures to be down big, in order for you to be selling here, you have to believe that things will continue to deteriorate, and deteriorate much faster than they have. You have to believe that these companies -- companies like United Tech (UTX - commentary - Cramer's Take) and Honeywell (HON - commentary - Cramer's Take) that sell at 14 times earnings -- have to lose money. Those are high-quality companies that aren't going to fade into loss mode.
Or take the oils, which are now a huge part of the S&P 500. Some of these stocks are having multiyear earnings romps, but their multiples are SHRINKING. Conoco (COP - commentary - Cramer's Take) sells at 7 times next year's earnings even though natural gas has almost doubled! Does Chevron (CVX - commentary - Cramer's Take) deserve to sell at 8 times earnings even though it can double its dividend without a problem? Transocean (RIG - commentary - Cramer's Take) is sold out -- you can't get one of their rigs at any price out to 2015 -- and that company, which has the most visability I have ever seen, sells at 10 times earnings. Sorry, that's too cheap.
Sure Dow (DOW - commentary - Cramer's Take) is challenged for earnings with natural gas so high. But isn't that why it sells at 10 times earnings? Maybe Du Pont's (DD - commentary - Cramer's Take) expensive at 13 times earnings with 7% growth, but what happens if ag becomes a bigger part of its growth? Then DD's growth accelerates.
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.
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