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"Whenever you have a selloff, there are two ways to approach the stock market," Jim Cramer said on his "Mad Money" TV show Thursday.
Those two approaches to playing the recovery are the value method and the momentum method, he said.
The value method tells investors to look at the new-low list for stocks that are down 20% from their 52-week highs and that pay at least 3% in dividends. Cramer believes that this approach uncovers companies that the hedge funds were forced to sell, or "good companies with broken stocks" -- not companies with serious flaws.
Cramer believes that there are further interest rates cuts coming from the
. If true, he said, dividend-paying stocks will increase in value.
As a "value method play," Cramer likes
, a company that owns and leases jets. Aircastle, off from its 52-week high in June, was "knocked down by sellers concerned with the credit crunch," he said.
The company's "entire portfolio is leased out," he said, and it is shifting to buying and leasing freighters, which give better returns than passenger planes.
Cramer added that the company's COO recently bought 2,000 shares and that insiders "only buy for one reason: They think their company's stock is going up."
On the value method, Cramer also liked
( GLS), which he first recommended last May. The stock is down 15% since then, but it has an 8.2% yield and $1.2 billion in capital.
This Magic Momentum
Cramer continued with his second way of playing the recovery -- as a momentum investor.
Here, he said, investors should look at the new-high list."
Cramer has liked
since July as a play on the
IPO. EMC, which he owns for his charitable trust,
Action Alerts PLUS, is up less than 3% since then.
The company owns 87% of VMware's equity, a stake now valued at $6 billion more than in July. VMware stock, offered at $29 on Aug. 13, hit $70 Thursday.
Cramer compared the EMC and VMware relationship to that of
and its spinoff
. Cypress is up 52% since the spinoff.
Cramer believes that EMC, which trades at 11 times next year's earnings, is cheap. Furthermore, its data storage business is also doing well.
Although he looks at EMC as a key play for momentum investing, Cramer told viewers to "wait a little while" to buy in.
In his "Sell Block" segment, Cramer focused on the $80-to-$120 stocks he liked in early July. But because these stocks are down 4.2% since, Cramer admitted that he "misjudged the market." The
is down 4.5%.
Of all his $80-to-$120 picks, Cramer still likes
, down 3.2% since July;
, which he was too early on; and
. Both Terex and Caterpillar are levered to construction. He owns CAT and COP for his charitable trust,
Action Alerts PLUS.
Because the chemical industry has few companies left, it Cramer said that
Air Product & Chemicals
has pricing power on its side.
has made smart moves but is still too high, he said.
Of all the energy companies,
( XTO), which he owns for his charitable trust, is the best pick.
In his "Mad Mail" segment, Cramer responded to his first message, saying that
( OMTR) could go to $30. Additionally, as one of his four horsemen of tech,
is "going to be terrific."
Cramer said that the
( CFC) "play is over" and that the
Bank of America
play has begun.
And finally, Cramer liked
, believing that the company is "on a mission." He told viewers to listen to the Crocs conference call to know why he is excited.
During the "Sudden Death" round, Cramer was bullish on
Central European Distribution
( CEDC) and
He was bearish on
Cramer was bullish on
Eagle Bulk Shipping
Blue Coat Systems
Cramer was bearish on
Circuit City Stores
For more of Cramer's insights during the Lightning Round, click here
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At the time of publication, Cramer was long EMC, Caterpillar, XTO Energy and ConocoPhillips.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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