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NEW YORK ( TheStreet) -- Is today's historic market close the real deal or just a flash in the pan? That was what Jim Cramer was trying to figure out on his "Mad Money" TV show Tuesday. Cramer told viewers there are a few key metrics that investors can use to see why today's highs are vastly different than those of October 2007. The first metric is valuations, Cramer told viewers. Take a stock like Google ( GOOG), which received another upgrade with a $1,000 price target today. Is Google expensive? No, not really. Google trades at just 15 times earnings, Cramer noted, and that's less than most companies that make things like cereal and soap, companies that certainly don't have Google's growth. Investors can also look at market breadth, said Cramer. In 2007, the markets were only being led by commodity stocks and anything levered to China. Today, the markets are seeing strength in just about everything, including housing, autos, retail, rails, aerospace, the banks and a whole lot more. Cramer reminded viewers that the transports usually act as a confirmation of a rally. They weren't rallying in 2007, but they were today. So with valuations not stretched and good leadership and a wide breadth of stocks, the markets certainly look a lot better today than in 2007, Cramer concluded. Add to that the many things that are now behind us, including the financial crisis, the worst of Europe, U.S. debt downgrades and the presidential election, and it's easy to see why investors may be adding to their positions instead of running for the hills.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleagues Scott Redler and Carolyn Boroden over the chart of Facebook ( FB), a stock Cramer owns for his charitable trust, That's why Facebook's weekly chart is so intriguing. Redler noted that the stock has formed the bullish cup and handle pattern, which would indicate a monster rally if it can get above $32.50 a share. Boroden's analysis was similar in nature, noting that the stock's next resistance is at $28.32, followed by $34, and then higher from there. But Cramer said he's a fundamentalist, which means he doesn't like waiting for stocks to go higher before buying them. He said Facebook has conquered mobile, which was its big stumbling block after its botched IPO. That's why he'd use and weakness to be buying Facebook, then riding it higher to its resistance levels and beyond.
Flying US Airways
When the facts change, Cramer's always willing to change his mind, even if it means recommending an airline. Cramer said his mantra for decades has been "never, ever own an airline," but with a string of mergers and consolidation in the industry, it's now time to recommend US Airways ( LCC). Cramer said that after years of cut-throat competition that made the airlines simply un-investable, a string of mergers has taken away much of that competition, which may be bad news for travelers but is great news for stockholders. There's a new world order, said Cramer, with the top four airlines now set to control 80% of all U.S. flights. That's why US Airways, which is set to merge with American Airlines when that company emerges from bankruptcy later this year, is worth getting in now, ahead of the deal. Once closed, the new American will be the largest airline in the world, said Cramer, and it will be number one on the East Coast, number one in middle America and number three on the West Coast. With an estimated $1 billion in cost savings expected from the deal, Cramer said there's a lot to like about this combined behemoth. Shares of US Airways will be trading in a range until the deal is approved, said Cramer, but if it follows the pattern of other acquisitions that stagnation will be quickly replaced by a sharp move to the upside in the following years.
