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The Air Up There

Author:

Gee, for some stocks it didn't take long to get back to levels that we thought were too high when we thought things were good!

Take

Procter & Gamble

(PG) - Get Procter & Gamble Company Report

. When it last got to these exalted levels, I thought the company's business was immune to the woes of the lesser-developed countries and had great product momentum.

Now I know that it is not immune; far from it. The growth at the company is anemic, single digit, maybe even low single digit ex-the reversal of currency.

Yet people are paying $89 for it. Weren't we just shorting this stock profitably in the high 70s just a month ago?

Or

Coke

(KO) - Get Coca-Cola Company Report

. Talk about a company that everybody wrote off in the 50s. Now it is challenging 70 again. Is it better than ever? Hardly. In fact, it is being pummeled everywhere.

But so what? It's never been a cheap stock other than when it looked like growth had peaked out. That's when you had to jump in.

I don't know what to do with either stock now. They have had huge runs and the fundamentals haven't improved noticeably. Reluctantly, the only conclusion one can reach about PG and KO is counterintuitive to the notion of value: You have to buy these kinds of stocks on dips in a low-inflation world, because chances are the dips are caused by a combination of events some of which have to do with the companies themselves and some of which have to do with the

S&P

index.

When Coke was in the mid-50s, the S&P was getting killed. The stock suffered through a series of downgrades. It was clearly disappointing. But the market teaches us time and again that with true "brands," as opposed to manufactured "brands" like

TheStreet Recommends

Nike

(NKE) - Get NIKE, Inc. (NKE) Report

, you can't get in unless things have hit a rough spot for the company

and

the stock market. Because companies like PG and KO have such strong cash flow and because they can stand there and buy every share that is sold for all they care, unless you get that double whammy, you don't get these stocks on the cheap, ever.

Take

Gillette

(G) - Get Genpact Limited Report

. I made a number of calls to analysts Monday looking for reasons to take off my short leg of the stock. (I am long deep-in-the-money calls and short at-the-money calls). Not a single analyst could come up with a reason. If I did not respect the analysts so much, I would have closed my eyes and brought in the short leg. When nobody can think of a reason to buy G, you have to buy it, because sooner or later there will be a reason.

I haven't bought these stocks up here for one simple reason: There is still so much trashed merchandise around, what the heck do I need to buy P&G up here for? (Check the new

Forbes

for some great graphs showing cheap merchandise. I clipped and saved these excellent charts.) But I also know something else: If the "market" were to take these stocks down again to some levels that are less insane, I would be a buyer.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com.

At the time of publication, the fund was long Gillette, with calls sold against it, although 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 TheStreet.com at

letters@thestreet.com.