Jim Cramer warns that even high-quality stocks from price to low-earnings can suffer a downturn

CNBC’s Jim Cramer warned investors on Wednesday that while there are some stocks with low price-to-earnings multiples that look cheap and therefore investable, it should be noted that they are not always are also resistant to recession.

“There are stocks with price-to-earnings multiples that are extremely low and can’t be bought under any circumstances,”Crazy money“said the presenter.” Then there are the higher quality ones that you can justify owning if you’re feeling a little more optimistic about the economy. “

Cramer is marked Nucor, Fees are collected by brothers, Ford and Whirlpool These stocks have a low price-to-earnings multiple and can be a great bet if the economy stays strong.

However, since these stocks were toppled earlier during the height of the pandemic, it’s likely they will continue to fall if the market doesn’t recover, Cramer said.

“If we get into a sharp recession, all four could go much lower. Keep that in mind if you’re risk-averse.” he say.

Cleveland-Cliffs is a stock with a low price-to-earnings multiple that investors should avoid altogether, he added, predicting that the stock has more upside.

“When you buy a stock at an extremely low price, the earnings double but the scary thing is going down, that’s because these stocks look cheap thanks to the fact that the estimated earnings… are so high,” he said. . “They can go lower and then lower and then lower.”

Disclosure: Cramer’s Charity Trust owns shares of Ford.

Register now for CNBC Investment Club to track Jim Cramer’s every move in the markets.

Disclaimer