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Admiring <I>Fortune's</I> Most Admired

<I>Fortune's</I> annual survey of America's most-admired companies is a great tool for understanding why some companies trade better than others.
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When new players try to figure out the mysteries of the price-to-earnings multiple, they always get stymied about how pros know that one company is worth so much more than another. How did

General Electric

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get that premium P/E multiple, or why do people thumb their noses at the stocks of







Trump Hotels



Well, newbies, let me tell you how I first grasped the concept: through


annual survey of America's most-admired companies. Got my issue yesterday and immediately devoured it to be sure that my perspective on companies is still in synch. You will grasp very quickly why the market pays up for some drug stocks and not for others or why

Stone Container


bumps along the new low list even while

Time Warner


nears the new highs.

This issue is always a money-maker, not for


, but for you. When I worked with my wife in the late '80s and early '90s, she always grabbed this issue and said, "Do work on the bottom 10. They won't be around." She loved the least-admired companies list, and it led to one of our biggest hits ever -- a giant position in

Control Data



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). It finished last in the survey in the second year we worked together, and she urged me to go out and see them and spend some time at the company.

Sure enough Larry Perlman, who is still running the joint, was not about to let his company appear at the bottom of this list ever again, and he told me so. He began the radical restructuring that led to Ceridian, a multiyear changeover that gave us a quadruple!

I know I have hyped


before, chiefly because of Joe Nocera's coverage of the


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trial, which, by the way, is only about a billion times better than everyone else's. (In fact, the staggering thing is that in this, the most exciting trial of the century in my mind, only Nocera gets it!)

But this issue is a must. You have to understand why some companies trade better than others, and this is a great place to start.

James J. Cramer is manager of a hedge fund and co-founder of At the time of publication, his fund was long General Electric and Time Warner and owned Microsoft calls, though positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to