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EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Separating the Bargains From the Busts

Buyable declines or declines that have to be avoided? That's the biggest question I've seen during this earnings period, and it is on display big-time in today's session.

First, the buyables. I want to take some Starbucks (SBUX) here, because I believe that CEO Howard Schultz will turn things around in Europe, which was the only real weakness. Some would say, why not go with Dunkin Brands (DNKN)? -- good growth and no Europe. I think that Starbucks, on a discount with one of the best CEOs in America, is worth the risk. But I am never going to say no to Dunkin.

I want to buy the decline in Celgene (CELG). Yes, Revlimid, its big drug, was soft in January. But the number of approvals that Celgene has coming up and the reasonable explanations for the Revlimid weakness -- inventory and Medicare Issues -- are now priced into the stock after this big decline.

Starbucks and Celgene are classic growth stocks that have been able to transcend declines for some time. I think they will do it again.

Now, the not-buyables. I wish I could say that you can take advantage of the decline in Procter & Gamble (PG), but I believe the company has lost its way and needs to take dramatic price cuts in everything from shampoos to razor blades. The company has raised prices too much, and it is now losing share and has had dramatically reduced growth rates on so many different product lines. Better to buy Kimberly-Clark (KMB), Colgate-Palmolive (CL) or Clorox (CLX).

Deckers Outdoor (DECK) can't be bought, as tempting as that is, because Deckers is Uggs, and Uggs has run out of steam. Sure, it was too warm for Uggs, but the lifecycle of a brand can play out, and I think that's exactly what happened here. You cannot bottom-fish.

How about Ford (F)? I find that the terrible numbers out of Europe and the weak numbers out of Latin America more than offset whatever good is coming out of North America, and there's a lot of good in North America. You have to wait until one of these two areas clears up, and CEO Alan Mulally can't predict an end to declines in Europe. In other words, stay away.

How about the disk-drive companies? They are cheap as dirt and are down huge. To which I say, don't even think about it. Those companies have soared because of a supply shortage caused by Thai flooding. Their gross margins have been huge. But drives are commodities. Once they go into equilibrium -- no more shortage -- something that Western Digital (WDC) point-blank says has happened, you can't buy them. Earnings will plummet, and the stocks will stay dangerous for some time.

Declines can be opportunities. However, not all declines are opportunities. I would take advantage of the pullback in Starbucks and Celgene. But the others? Sold to you.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

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