TheStreet.com's Jim Cramer says the sellers are in control, and without dividend protection, we have no floor. The bad stuff is in the market. It just has to get more in. That's all. That's the conclusion you have to reach when you see companies like Terex (NYSE: TEX) (Cramer's Take), which is valued at only a billion and a half dollars, or Joy Global (NASDAQ: JOYG) (Cramer's Take) at $2 billion and change or McDermott (NYSE: MDR) (Cramer's Take) at $3 billion.
In other words, forget about the stock prices. They are almost all absurd unless we are headed into a recession of such magnitude that companies start showing severe losses in the first quarter. Think about the market cap size. If Terex, which is actually a pretty good machinery company, can sell at a billion and a half dollars -- about the price that some acquisitive company might have paid for a division of Terex a year ago -- why can't it sell at $1 billion? How about $800 million? What's to stop it? The sellers at this point obviously don't even care about it, not one bit. They just want money. The buyers have had their heads twisted off and don't want anything more to do with it. No one wants to recommend it because the estimates are too high. And without a dividend, it has no protection; besides, people might perceive that the dividend can't be paid -- a la Freeport (NYSE: FCX) (Cramer's Take) -- and sell it anyway.
Last night I had a call from an employee of Parker-Hannifin (NYSE: PH) (Cramer's Take) who wanted to know what I thought of the stock at $37. I know I have liked this company for years, just a solid metal bending company that has done many things right and really represents the best of American manufacturing. But I took a look at the yield, 2.63%, and said simply that it hadn't fallen enough.
That's how I feel about so many stocks that are owned by the wrong owners with the potentially right owners either on the sidelines or petrified -- not down enough yet.
And because of the phony nature of how the market trades -- the price could be up or down 4 in a heartbeat -- why not wait until it at least yields something more worthy? Because with the exception of NRG (NYSE: NRG) (Cramer's Take), there hasn't been a single opportunistic offer of a company whose stock has been beaten down beyond reason.
Except that it could be beaten down beyond reason by another 10% or 20% and no one would care.
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RELATED LINKS:
U.S. Mulls Plan to Halt Foreclosures: Report
Cramer: How to Spot the Next Winners
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Freeport-McMoRan.
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Reader Comments (Page 1 of 1)
10-24-2008 @ 8:50PM
Linda said...
Mr. Cramer: I just want to ask why newspapers keep printing all the doom and gloom about the stock market and the looming recession? Perhaps if less information was printed there would be less negative reactions , stocks might not fall so much and the big bad recession just might not happen. Or maybe this is just oversimplification and wishful thinking on my part.
10-26-2008 @ 8:35AM
Drew said...
Jim, what ever happened to the big payout of Billions by AIG to people who were the "gangsters of wallstreet" that had insured their investments with Lehman Brothers with the blessing of the SEC ? October 22 went by and you have not said a word about the outcome of this Billiion dollar payout..... Did it happend and is the goverment going after these guys for robbing the stockholders?