Old Economy Stocks Aren't Dead: Part 1

Is the Old Economy really ready to falter? Or is this the beginning of sustained outperformance of the Dow Jones Industrial Average versus the Nasdaq Composite Index?

I find these exercises to be little more than navel gazing unless you get into the specifics and go over the individual stocks. Fortunately, I spend enough time staying current on these stocks that I think I can give you a good rundown of what I think is happening in each stock.

As always, I am a fundamentalist. I would love to hear what both Helene Meisler and Gary B. Smith think of these stocks, but I am stuck with what I see happening at each individual company.

AT&T:

I can't believe how low this stock has fallen. That's the market passing judgment on the leadership of AT&T(T Quote - Cramer on T - Stock Picks) which is judged to be angry, boastful and promising too much. The Street, by the way, is still lugging the AT&T Wireless(AWE Quote - Cramer on AWE - Stock Picks) deal and we are no exception, hanging on because we said we would hang on.

AT&T is in a nasty situation. I don't know how it will be able to finance all of the growth it needs, keep its market share and maintain leadership. At the same time this stock has been trashed. I think it is at the bottom of the range but I remain pessimistic about this equity.

Alcoa:

It should be able to take out costs of the Reynolds Metals(RLM Quote - Cramer on RLM - Stock Picks) folk and continue to rationalize the business. This is a great company that I think is a must buy once you are sure the Fed is done tightening. If you look at this year overlaid on 1994, when the Fed was as vigilant as today, you will see that stocks like Alcoa(AA Quote - Cramer on AA - Stock Picks) stumbled badly when it was clear the Fed wasn't done with its work.

American Express:

The stock of the premier financial-services company in the world has had a huge run. I think it wants to rest as the earnings catch up with the multiple. But I want to buy this stock on any weakness. It is a great stock and great company.

Boeing:

Here is a battleground stock. Asia's orders have turned. But the business is still not run well. I think Boeing(BA Quote - Cramer on BA - Stock Picks) is a bargain but internally we are not buying it because we are concerned that the company will disappoint on earnings even as we think the company is turning.

Caterpillar:

We felt like buying this company after Deere(DE Quote - Cramer on DE - Stock Picks) reported its upside surprise but we are too fearful of the Fed to take any down. Caterpillar(CAT Quote - Cramer on CAT - Stock Picks) will continue to do poorly as long as the Fed is tightening.

Citigroup:

We are huge fans of Chairman Sandy Weill but we also are respectful of the slowdown in the securities markets and the rise in short- term rates. These should put a firm lid on Citigroup(C Quote - Cramer on C - Stock Picks) despite management's best efforts.

CocaCola:

Blessed by Warren Buffett, but little else. Coke(KO Quote - Cramer on KO - Stock Picks) is still massively overvalued versus its peers. We are long Pepsi(PEP Quote - Cramer on PEP - Stock Picks) which we think is much better run and cheaper.

Disney:

Fighting the parking lot, getting early tickets to a sold out Dinosaurs -- and we had to sit in the front row yet -- I found myself plenty glad I am long this stock. Disney(DIS Quote - Cramer on DIS - Stock Picks) is making a comeback and it has new theme parks and better film releases and a resurgent ABC to thank. This stock goes higher we think.

DuPont:

We got whacked by the last quarter. We thought DuPont(DD Quote - Cramer on DD - Stock Picks) was going to have a big year but it no longer seems in the cards. Its spinoff of Conoco(COCA Quote - Cramer on COCA - Stock Picks) hasn't helped it.

Eastman Kodak:

Real quandary here. This is the gang that can't shoot straight. They should be dominating. Must be something in the water up there. I want to buy Kodak(EK Quote - Cramer on EK - Stock Picks) so badly on a price basis but it can't seem to beat the Japanese.

ExxonMobil:

As I was writing this I realized that we should be long ExxonMobil(XOM Quote - Cramer on XOM - Stock Picks). Great cash flow, great management, positive crude prices, safe and conservative. It's what the market needs. An up stock.

General Electric:

It is our favorite stock in the Dow. It blends financial and cyclical together with great management. We are perennially long this. We always hear how overvalued GE(GE Quote - Cramer on GE - Stock Picks) is and we always say the same thing: we wish we had more similarly overvalued stocks in our portfolio.

General Motors:

The definition of cheap. We are long Ford(F Quote - Cramer on F - Stock Picks), but we prefer both of these stocks to most of the market. We would own a boatload of GM(GM Quote - Cramer on GM - Stock Picks) if we knew when the Fed would finish its business.

Hewlett-Packard:

It didn't have a great quarter. A lot of bad money is in this now, as people thought this would be a breakout quarter. We think Hewlett-Packard(HWP Quote - Cramer on HWP - Stock Picks) is at the low end of the range. But we aren't stepping up.

Home Depot:

Not a great quarter, but the stock has come down quite a bit. We think Home Depot (HD Quote - Cramer on HD - Stock Picks) can't move up big with these rates and this Fed. But we want to own it when the Fed is done.

Honeywell:

Leveraged to lower rates, and rates are going higher. Honeywell (HON Quote - Cramer on HON - Stock Picks) has lots of aerospace exposure but lots of construction which is slowing.

Later today: My forecast for some more Old Economy stocks.