Does it always have to be this bad? Of course not. Can it just go back to being the way it was? I don't think so. Where it
presumed that most of the dot-coms that might buy equipment were going to become public. Where it
would blow away the top and bottom lines for years to come. We now know that can't happen.
So what we have to do is come up with a matrix that allows people some comfort that next year will be a big earnings year even as this one is a year devoted to big numbers on the revenue side. Let's take
. We aren't long the stock but I was salivating over it at one point today, betting it would come down big. Another 15 points and this company may actually appear only somewhat ridiculously expensive on 2002 earnings.
Of course, on present earnings it is absurdly expensive. But the possibility that the out-year estimates could be low, coupled with the decline in the stock, allows us to see PMC-Sierra as a potential 60-times-earnings story. Don't laugh. If you can buy the fastest-growing companies at a multiple that is less than three times the market multiple, you will probably make good money.
Right now, people are doing this kind of analysis all over the Street. What they are concluding is, a) if something can have a multiple on 2002 that is not ridiculous, and b) there are not millions of insiders willing to blow out, and c) the stock has come down quite a bit, it can be bought. You want to have this shopping list ready because, as witnessed today, the ugliest moment was the best buying opportunity.
At 3:30 p.m. when the margin clerks were done, the market had a spectacular rebound. If you have your list of good fundamental-earnings plays ready, you can hit it out of the park on an intraday basis. Or you can go home long something that actually has a chance to grow into its market cap.
: Overwhelmingly bullish emails today from readers. Believe me, I was searching all day to put money to work, and we did put net cash into the market. But it is not that easy finding bulletproof stories.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes 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 at