Nowadays, with a market that sees wild, 1,000 point swings from one degree to another, what should investors make of upgrades?
Jim Cramer has some advice for investors looking for clarity.
Watch the full video above for more.
Jim, there's a human response to panic, to uncertainty, and that sometimes is honestly to just revert to what you know. So I want to take a second and I want to ask two questions that are educational based, because I think that we sometimes see investors go back to old habits just because they don't know what to do in this market. So my first question for you based on this is it worth buying a stock on an upgrade at this point?
Well you know, that's a fantastic question because what I like to look at is how much is the stock down, how much of the earnings been cut, and how much can it be in this new world, a secular grower versus a cyclical grower. So for instance, Boeing, I regard as being a secular grower because of air traffic. Their numbers have come down a great deal but it's not going out of business. But then I have to say, "Okay, what's the customer demand?" And the customer demand is just not there.
You have to check off all the boxes. You have to have new world, you have to have secular growth, you have to have customer demand, and you have to have balance sheet. And if you don't have all of those, then you're going to end up coming up short. And we had the unbelievable CEO of Ulta on today, Mary Dylan. Unbelievable, and she checks off all the boxes. Now she's doing the last box by dot com, but her dot com is unbelievable. And when I see someone that has all the boxes checked, then I'm ready to go and I want to buy.