CNBC’s Jim Cramer warned investors Wednesday that some stocks with low price-to-earnings multipliers are cheap and therefore investable, noting that they aren’t always recession-proof.
“There are stocks with extremely low price-to-earnings multipliers that cannot be bought under any circumstances.”mad Money“So there are high-quality ones that you can justify owning if you feel a little more optimistic about the economy,” the host said.
However, because these stocks have fallen before during the height of the pandemic, it’s possible that they will continue to fall if the market doesn’t improve, Cramer said.
“If we get a sharp bearish, all four could go down a lot. Keep that in mind if you take a risk,” They said.
Cleveland Cliffs is a stock with a low price-to-earnings multiplier that investors should avoid entirely, he said, predicting that the stock has more downsides.
He said, “When you buy a stock with a lot of earnings at a very low price and still the darn thing goes down, it’s because these stocks look cheap simply because of the fact that the earnings estimates.. . too many,” he said. “They can go down and then down and down again.”
Disclosure: Cramer Charitable Trust owns shares of Ford.