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NEW YORK (
) -- "In this environment, you can't bank on higher multiples," a down beat Jim Cramer told the viewers of his "Mad Money" TV show Monday.
Have stocks "become too cheap?" Cramer's reply was a decisive "no."
Cramer said it's true that stocks in the
are trading at just 12.7 times their earnings, well below their historical five-year average of 14.2 times earnings. But he said they're lower for a reason, and that reason is Washington.
"We just can't pay up for earnings that are under attack," Cramer told viewers. He said with health care reforms, financial regulations, and now a ban on offshore drilling, President Obama is only getting started. He said next on the Obama's agenda is cap and trade, an initiative that hurts the industrials and utilities, and card-check unionization, which hurts retail and the banks.
Cramer said the markets are having a hard time adjusting from the laissez faire days of the Bush administration to the hyper regulatory administration that is Obama.
He said only a handful of companies can transcend the assault, like those on his C.A.N.D.I.E.S. list of high growth stocks, and stocks like
Without super growth, he said, investors shouldn't pay up for earnings they can't count on, at least until November when the political winds may change.
There's only one thing that can propel a stock higher against the downward pressure of this market, Cramer told viewers, and that's earnings momentum. He said stocks whose earnings estimates are constantly being raised seem immune to the markets woes, while those without it, are stuck in the morass.
That's why Cramer said he's such a fan of his C.A.N.D.I.E.S. portfolio of high growth names. He said a year ago,
, a stock which he owns for his charitable trust,
Action Alerts PLUS, was expected to earn $7.40 a share. Current estimates are now for $16.14 a share.
Likewise with the other C.A.N.D.I.E.S. names, said Cramer, with estimates for
Chipotle Mexican Grill
up 50% from a year ago,
up 39% and
On the flipside, Cramer featured the once loved stock of
Research In Motion
( RIMM). Cramer said this company beat earnings by four cents a share, but has seem its shares continue to slide. The reason? No momentum. Cramer said share of RIMM are down 24% from their highs as the company's earnings momentum slows.
He said the big money is now worried whether RIMM will become another
( MOT), two stocks like in the dust of Apple's iPhone.
Cramer said even on the company's conference call, analysts noted that with
pumping the iPhone, and both
seemingly aligned with
Android phones, RIMM is left with little carrier support. Making matters worse, RIMM's buy-one, get-one promotion have most likely artificially propped up the company's numbers.
"Things have gotten way to gloomy around here," Cramer told viewers, as he unveiled the first in a series of stocks where business is going from good, to even better. He said that railroad giant
is one company worth looking into.
Cramer noted that at a recent analyst meeting, Union Pacific CEO James Young said that carloads were up 17%, meaning the the company is shipping a lot more, not less. Making matters better, pricing was up 3% on their carloads, and the company is taking employees off furlough and putting them back to work.
Union Pacific is also taking unused locomotives out of storage and putting them to work as well, with 750 locomotives now back on the rails. And with all six of the company's main businesses showing signs of strength, Union Pacific has also purchased an additional 7,000 containers to help it grow.
Cramer said Union Pacific trades at 12.9 times earnings, but sports a 12% growth rate, making it an inexpensive stock with a 1.8% yield to boot.
Cramer told a viewer that it's OK to put up to one-fifth of a portfolio into gold using stocks like the
SPDR Gold ETF
Cramer told another viewer that
is a great story, especially in China, where the company is growing like gangbusters.
Cramer told a final viewer, and employee of
, that with shares down sharply from their high of $120 a share, he'd consider investing in the company's stock purchase plan.
Cramer was bullish on
Clean Energy Fuels
He was bearish on
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Apple.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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