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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.