Cramer’s Long / Short Combination Trade

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If you're looking for a more elevated investment idea, Cramer suggests shorting one stock against a long position in another.

That type of trade is often referred to as a pairs trade and can be used by investors to express a belief that one stock has been overbought relative to peers.

In this case, Cramer thinks a smart pairs trade would be short Procter & Gamble against a long position in another packaged goods company such as Unilever or Colgate.

Largely Cramer thinks the Street became too euphoric afterProcter & Gamble reappointed A.G, Lafley as chairman and CEO, a role he also held from 2000 to 2009.

Although Cramer understands the excitement, he thinks too much is already priced in.

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Andrey Prokhorov | E+ | Getty Images

For example shares are already up 25% in the one year period after "Former CEO Bob McDonald announced a series of restructurings and reorganizations last summer," Cramer said. There probably aren't any more significant cuts to be made.

Also the need for such a massive reorganization suggests to Cramer that "McDonald did not receive the treasured hand that the Street thought AJ had given him 4 years ago."

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But perhaps most important, Cramer believes issues facing Procter under McDonald will still face Procter under Lafley – issues such as slow revenue growth and performance that lags peers.

Those kinds of issues aren't usually reversed in a quarter or two.

All told Cramer just doesn't believe P&G belongs at current levels. "I would take the euphoria and book the gain. Put simply: the stock's too high. I would short Procter against those that are better."

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