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NEW YORK (TheStreet) -- This, too, shall pass, Jim Cramer said on Mad Money Thursday after a big down day on Wall Street. But the questions remain: When will it pass and how low will the markets be when it does?
Cramer admitted that there's not much to like in the markets just yet because the best stocks still aren't down low enough to be attractive. Patience will be rewarded, he continued, as he offered viewers a peek into his thought process before buying for his charitable trust, Action Alerts PLUS.
Read More: 8 Stocks George Soros Is Buying in 2014Cramer said he's looking for stocks that are down -- not down just a little, but stocks that are really down. The industrials fit that criteria, down 10%, he noted, but many of them have exposure to Russia and Europe, making them risky. One of the stocks that could be hurt most by Russia, however, is Germany's BASF, and that would be good news for the U.S.-based Dow Chemical (DOW). Cramer said Dow offers shareholders a 3% yield and has an activist investor to boot, which is why he's a buyer of Dow. What about the financials or technology? Cramer said the financials need higher interest rates so they're off the buy list, and many of the tech stocks, like Microsoft (MSFT), just aren't down enough to be attractive. Many food and drug stocks are also off the list after both Kellogg (K) and Kraft Foods (KRFT) reported horrible earnings. Cramer said the oil stocks may be hurt by downgrades with oil prices plummeting; meanwhile, the restaurant and retail names have just become too dangerous to own at the moment. There are the conservative stocks, like Walt Disney (DIS), Cramer concluded, but even Disney is not down enough to be attractive. That leaves only Dow Chemical, which is why that's the only stock Cramer was buying for Action Alerts PLUS so far.
Chinese FavoritesWith the initial public offering of Alibaba about to once again shine the spotlight on all of the Chinese Internet stocks, Cramer circled back to his three favorites in the group, Baidu (BIDU), Vipshop (VIPS) and JD.com (JD). Cramer said these three names are legitimate, investable companies that are taking advantage of the burgeoning ecommerce market in China. Read More: Economic Growth Is Increasing but Don't Expect Stocks to Ride With It Cramer explained that Vipshop is the largest discount retailer in China. The company's flash-sale business model is seeing huge demand and little competition from traditional retail channels. Shares are up 29% since Cramer recommended the stock in May and currently trade at 43 times the company's earnings. JD.com is most like our own Amazon.com (AMZN). The company buys wholesale and sells at retail through its huge online store, a model with lots of growth potential. Finally there's Baidu, the Chinese Google (GOOGL) with nearly 75% of all search traffic in China. Shares are up 1,400% since the market bottom in 2009 and currently trade at 26 times earnings with a 36% growth rate. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
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