We’ve seen it in health care, where many of the companies expected to get hit hard by Obamacare, especially United Health , have blown away the numbers. And Eli Lilly, Abbot Labs and Johnson & Johnson have all guided higher.
Tech is no different. While there have been a few disappointments in this space, Google and Apple outperformed, while EMC and IBM boosted their earnings projections.
In the banks, numbers needed to be raised for Wells Fargo, US Bancorp and Goldman Sachs . Like tech, there were some negatives in this group as well—like, say, Bank of America—but overall the earnings were positive.
McDonald’s , Chipotle and a number of apparel companies have set the tone for restaurants and retail. And given the strong September same-store sales, Cramer predicted guidance raises from Macy’s, Kohl’s, Bed Bath & Beyond and Best Buy. He likes them so much he recommended them all as investments on Monday.
Similar stories can be found in the chemicals, aerospace, insurers, transports, telecoms and yes, even the much-maligned industrials. Cramer fave Ford Motor has yet to report, as do the oils, but considering Johnson Controls’ strong quarter and the price of crude at $80, the “Mad Money” host is expecting good news from these two as well. In fact, the only weakness he sees coming is from natural gas, but who could expect anything different given the commodity’s falling prices?
“All of these quarters are the building blocks of a bull market,” Cramer said. “They make me come back to my central thesis: The market is not, and cannot be expensive based on the earnings reports we have seen. And the negative predictions of the bears who told us the numbers would have to be sliced and diced and cut some more—I think they’re looking more and more ridiculous and untrue by the day.”
Cramer did admit that we’d need to see the Republicans capture a majority in the House before price-to-earnings multiples really went up, as Washington gridlock is good for Wall Street. But still, there’s no reason stocks should drop in price if that fails to happen. Not with these obviously low valuations.
“Too many companies in the S&P are good and getting better,” Cramer said. “As company after company keeps beating earnings estimates, I predict we will forge a new consensus about 2011, one that takes up estimates for the entire market.”
When this story published, Cramer’s charitable trust owned Abbott Laboratories, Apple, Bank of America, EMC, Johnson Controls and McDonald’s.
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