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)
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)
? 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)
, 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)
, which just reported? You get double-digit growth for 12 times earnings.
Then there's United Technologies
(UTX)
: 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.
Random musings:
I am looking for oil to make a run to $100 on a supply cut from OPEC. Those companies with reserves -- Apache
(APA)
, Devon
(DVN)
, Anadarko
(APC)
, ConocoPhillips
(COP)
and Occidental
(OXY)
-- could have a nice run.
Meanwhile, I can't ignore the E*Trade
(ETFC)
insider buying, particularly because I know some of these people. Maybe they have a plan about how to clean up the balance sheet and I just don't see it.
After multiple downgrades, Medco
(MHS)
is right back. It is the stock the big boys want because of visibility. This is some move, if you recall it pre-split!
I'm surprised of the impact of an upgrade Electronic Arts
(ERTS)
. What power these analysts have in this indecisive time.
At the time of publication, Cramer was long ConocoPhillips and McDonald's.
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