"I just told you how to spot the stocks with low-quality earnings.  I gave you HRB(H R BLOCK INC),LU  (LUCENT TECH INC), and MAX  (IMAX CORPORATION ).  

I promised I'd tell you how to spot co.s with strong, healthy earnings growth that can carry you through a bad market - any market.  And that's what I'm going to do right now.

These co.s - they are the 'realists...'  They've got every detail down.  They are the co.s whose earnings should be sustainable in a tougher environment, which is exactly what the market says is coming. 

I've got three of them - three co.s with high-quality, sustainable earnings that I think can be your life raft, even in this sinking market.  Even after it's derailed.

In general, you want to look for stocks:

Rule #1:   Too many acquisitions can be bad.  Organic growth is the focus here.

Rule #2:   Look at dividends.  To me, they are a real sign of health.  Any co. that has been increasing its dividend consistently is a co. with the kind of high-quality earnings you need to make it in this market!  Buybacks?  Also great, because they show the co. has the strength - enough cash - the resolve - to purchase stock even when the market's down 100.

My three picks are PEP  (PEPSICO INC), UTX  (UNITED TECH), and MMM  (3M COMPANY).


The bottom line!:   If you want to survive, you need to get our of the 'impressionist' stocks - the ones that try to look good, but don't have any substance to their earnings - and get into stocks like PEP  (PEPSICO INC), UTX  (UNITED TECH), and MMM  (3M COMPANY).  These are the virtually photography of my business.  They have solid, high-quality earnings that should keep them delivering."

Note:   MMM  (3M COMPANY) is owned by Mr. Cramer's charitable trust.

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