This column was originally published on RealMoney on June 4 at 12:14 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
We've got three overall themes to this market: takeovers/going private, revaluations and catch-up.
I want to distinguish these themes from the bull sectors -- aerospace, ag, minerals, oil and gas. I want to distinguish them because these themes cut across
Today we are seeing a revaluations of a host of stocks:
- General Electric (GE) - Get Report off of a Barron's article that says the stock is at last ready to run
- Wal-Mart (WMT) - Get Report off the upgrades and a decision by management to buy back stock instead of growing uncontrollably
- oil companies, which seem to get revalued upward on a regular basis
- Google's (GOOG) - Get Report being revalued off the notion of failing competition from Yahoo! (YHOO) and Microsoft (MSFT) - Get Report
Each week we get the revaluations. We saw one last week for
off a conference call. And we saw one for
off the quarter. We are seeing a revaluation of
, which was perceived to be a hurting equity off of the possible dry-up of subprime issuance, but we know now won't be hurt much at all. Plus the leveraged buyout activities, as Merrill says in its upgrade this morning, are causing estimates to move up rather sharply.
Once the revaluations begin, they rarely stop. That's because the revaluations then propel the stocks to breakout levels that therefore become self-fulfilling.
Then, once a stock advances, like a Wal-Mart, people see that peers (in this case,
) are cheap and they play catch-up. We are seeing something like that happen right now in the oil and gas plays after the buy of properties by
If your stock can go up off a buy, then it has the ability to move
higher. This process mystifies a lot of people because it causes them to think that the market's leaving them behind. That's why I urge you to recognize that even intraday bad openings, like the one we got today, count as selloffs that can be used to get in, particularly when you see one of these themes.
How would I use this session? Well, if Wal-Mart's up I'd buy some
on the dip (and Sears is still dipping). Or I'd go buy some BUD, which was revalued last week. Or consider buying some
, which is once again falling behind the group.
I have referred to these themes as reminiscent of the 1980s, when we saw revaluations for major American food and drug companies. That period lasted much longer than expected, when
put on billions and billions of market cap.
Now that is happening again to other areas. I just think you have to respect how long that process went on and recognize that it is a relatively new phenomenon that isn't about to end now.
buying aggressively in there every day and it shows. ... The multiples for
remain way too high. ...
should be up much more on this new Revlimid use.
General Electric owns CNBC, for which Cramer is a featured commentator. At the time of publication, Cramer was long XTO Energy, Sears Holdings and Freeport-McMoRan.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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