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NEW YORK (TheStreet) -- Today was a hideous day for all stocks, Jim Cramer told his Mad Money viewers Tuesday, but it should've only been a hideous day for some stocks. That won't be apparent for a few days, Cramer added, but eventually the smart investors will start picking up the bargains.
With the advent of index funds, it's easy for the entire market to trade in unison in the short term. But over the long term, all stocks can't be bad at the same time. The U.S. dollar was strong today, but that means that the domestic names we liked earlier this year, mainly the restaurant and retail names, should be back in vogue.
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If interest rates are inching their way higher, then the dividend stocks
, like the consumer packaged goods, REITs and utilities should be good investments. Meanwhile, if you believe oil is back on the decline, then the airline stocks should start soaring again.
What happens if the Federal Reserve
raises interest rates, something Cramer said would be a horrible idea given how our economy is weakening? Well, then the health care and biotech stocks
, which are impervious to interest rates, should be bought.
Let the selling run its course, Cramer told viewers. Then, once things settle down, start picking through the rubble for the stocks that went lower but shouldn't have.
Using Your Noodles
When a high-flying growth stock loses its mojo, there's no telling how low it can go. Case in point: Noodles & Company
(NDLS - Get Report)
, a stock which tripled in the days following its 2013 IPO, but ever since has failed to meet even its own expectations.
Noodles has missed estimates
for six consecutive quarters, failing to beat on either the top or bottom line. The company's same store sales have been faltering, along with its gross margins, all leading to a 29% decline in the stock in just the past month, after the company reported its latest disappointment on May 5th.
So what's wrong at Noodles? Chalk it up to a management team that was way too optimistic and promotional just after its initial public offering but is now failing to execute.
On its latest conference call, management again tried to spin its ailing same store sales by noting that if you excluded weakness in three markets, sales were actually up 3.2%. What they failed to mention, however, was the three markets they excluded, which included their home turf of Colorado, account for nearly a third of the company's overall sales.
Yet, despite all its failings and its decimated stock, shares still trade at a hefty 32 times earnings, more than Chipotle Mexican Grill
, which is growing far faster and is a far more reliable company.
Never buy a stock that has lost its credibility, Cramer warned. In the case of Noodles, investors simply cannot trust what management has to say given their horrible track record of predicting where they've ultimately ended up.
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