'RealMoney' Radio Recap: Speculation Causation

Bears who believe the market has gotten too speculative will miss the next leg up in the market, said Jim Cramer on his "RealMoney" radio show Monday.

While it's true that Myogen (MYOG Quote) and 8x8 (EGHT Quote) gapped up Monday on "fanciful" news, Cramer said these incidents of speculation are isolated.

Until he sees more activity like that, he believes speculation is not yet out of control and that the market isn't finished going up.

On the flip side, Cramer sees two bellwether, best-of-breed stocks, United Technologies (UTX Quote) and Honeywell (HON Quote), which are trading at less than market multiples but are "far from average companies," he said.

Honeywell, which trades at about 17 times earnings, has done nothing for seven years, said Cramer, even though it has diversified and invested in growth businesses, which make it "no longer at the mercy of the economy."

Cramer believes that United Technologies, even though it has seen its stock rise over the last six years, is the "single most consistent stock in the Dow. Isn't that worth a premium?" asked Cramer.

UTX trades at about 17 times earnings, but the average stock trades at 20 times earnings, he said. Why shouldn't UTX trade at 21, 22 or 23 times earnings? He asked.

Disciplined Trader

Former Major League Baseball player and RealMoney.com contributor Lenny Dykstra joined Cramer to talk about Tribune (TRB Quote) and Verizon (VZ Quote). Dykstra said he likes Tribune for a trade back to its 50-day moving average at $32.24. He also likes the Verizon April $25 calls for a bounce to $31 or $32, he said.

Cramer called both trades good, low-risk ideas.

Cramer's Callers

In response to a question about TradeStation (TRAD Quote), Cramer said TradeStation could be a takeover candidate, but he wouldn't bet on it. He said the company should benefit from a pickup in the brokerage industry in general. Nevertheless, Cramer prefers Ameritrade (AMTD Quote) to TradeStation.