Jim Cramer debuts new stock grading system, evaluates 6 major companies after earnings

CNBC’s Jim Cramer on Wednesday offered his thoughts on whether companies that recently reported their quarterly earnings are investable, leaning on his newly introduced grading system.

“The chief reason this market has become so difficult is that we finally have not-so-hot earnings, yet Wall Street’s not adopting its usual posture of buying stocks that issue NABAF results — that’s ‘not as bad as feared,’ ” the “Mad Money” host said. 

“Six months ago, you could get away with NABAF all the time. Forgiveness reigned within two or three days. Not anymore,” he added.

To keep up with this new market, Cramer created a new method of grading the stock of companies that recently reported their quarterly earnings.

“There are tons of stocks that can rally now that they’ve come down hard from their highs, but we need to figure out what can make those rallies possible,” he said.

Here is Cramer’s three-tiered system of grading stocks:

  • Exclamation point (!): This symbol represents “good news, meaning the stock’s entitled to go up despite the broader sell-off,” Cramer said.
  • Question mark (?): This means the stock is “going down pretty much no matter what,” he said.
  • Asterisk (*): “The earnings get an asterisk if there’s something away from the company that went wrong, something you can easily explain away. … So maybe the stock is worth buying here because it could get forgiven later,” Cramer said.

“Exclamation point? Yes. Question mark? No. Asterisk, maybe, just maybe, and that’s where the money can be made after the earnings, because they’re the decent ones that haven’t run yet,” Cramer said.

Here are the stocks he chose to highlight and his grade for each of them:

  1. Visa: !
  2. Microsoft: !
  3. Meta: !
  4. Boeing: ?
  5. Texas Instruments: *
  6. Alphabet: *

Disclosure: Cramer’s Charitable Trust owns shares of Alphabet, Boeing, Meta and Microsoft.