The Dollar Is Crushing Global Firms

OK, currency is a real issue. Commodity costs are still an issue. Lots of our giant international companies are beholden to the dollar's unbelievable rally, something that has happened so quickly that companies are getting crushed by it.

If you take the best of the best about handling currencies -- Procter & Gamble (PG - commentary - Cramer's Take) -- you can hear, on their call, how difficult this dollar is to navigate, as a huge amount of their costs and their sales are in local currencies, so the weak-currency countries are sourcing with weak currencies and then selling in weak currencies, which then translates into some miserable numbers and margins.

If PG's having this problem then so is Colgate (CL - commentary - Cramer's Take), although they had a monster quarter, as well as the other international consumer nondurable companies. Now, we know that lots of these companies have come down in value, but they are expensive vs. other stocks, simply because unlike the commodity stocks, say, they are at least showing top-line growth, not shrinkage.

The issue for me is that we keep taking out areas that can be investible, and we don't replace them with others.

More important, the commodity collapse has still not worked its way through to raw costs for the Procters. The oil price has moved very quickly, but the companies that sell derivatives of these products to the big consumer products companies are still keeping their prices high, and other commodities, like soda ash, are much more expensive and are still going up in price.

So you have this oddity of raw costs not coming down fast enough and the dollar soaring too fast, which means the fourth quarter for all of the internationals will be worse than we thought.

What you have to turn to in this moment are the companies with big yields that can pay them despite these issues, such as Kimberly-Clark (KMB - commentary - Cramer's Take), with 4% being the beginning of the buy point and a buy down based on the yield, or the domestics. I am not saying the domestics are a place not to lose money. They just lose less.

That's the right spot if you are waiting to find the bottom.

At the time of publication, Cramer had no positions in the stocks mentioned.

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Know What You Own: Cramer mentioned consumer products companies. Other names in this sector include Church & Dwight (CHD - commentary - Cramer's Take), Estee Lauder (EL - commentary - Cramer's Take), Johnson & Johnson (JNJ - commentary - Cramer's Take) and Kraft (KFT - commentary - Cramer's Take).

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