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Cramer said he's been racking his brain trying to figure out why some commentators hate the markets of late. But then it hit him -- valuation. There's more than one way for stocks to rise, but to many analysts and pundits there's only one way, and that's growth.
Stocks like Walt Disney (DIS) exemplify this model, said Cramer. The company has become a regular outperformer, delivering consistent growth and dividends that shareholders can depend on.Contrast that to a stock like Monster Beverage (MNST), which is rising because investors are simply willing to pay more for the earnings the company already has. This is called multiple expansion, and the pundits hate it. But stocks can be valued other ways as well, such as on enterprise value, or what another company is willing to pay on a takeover. Then there are stocks like Yelp (YELP) and Concur Technology (CNQR), which are rising on only the promise of increased sales. Then there are the companies valued on dreams. Stocks like Tesla Motors (TSLA) and Solar City (SCTY) trade on what investors hope someday those companies will become. Cramer said he doesn't condone all of these types of valuation, but investors still need to be aware of the many valuation models that are driving so many stocks in today's markets.