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NEW YORK (TheStreet) -- It's the first crisis of the year and the markets are handling it terribly, Jim Cramer told his "Mad Money" viewers Thursday. But with things in the U.S. better than they've been in ages, investors should be looking at the market declines as "game on," not "game over."
Cramer said there's no use fighting the first wave of panic that's stemming from the possibility of a regional Chinese bank default. The markets will respond, as they always do, by selling the S&P 500 futures, which in turn will take our entire markets lower. But while others panic, savvy investors should be buying up great stocks on the cheap, said Cramer.
Problems in China don't translate to the strength of the U.S. housing market, Cramer noted, nor the revolution in American oil and gas or big pharma. Cramer said Unilever (UL) just posted a terrific quarter and he still likes Mondelez (MDLZ) and Bristol-Myers Squibb (BMY).
Restaurants like Wendy's (WEN) remain attractive, as do stocks with big yields like Linn Energy (LINE). Cramer also gave the nod to anything social, mobile or dealing with the cloud, and even cult stocks like Tesla Motors (TSLA) and Amazon.com (AMZN).
All of these names are only getting cheaper, Cramer concluded, so investors should be ready as the selling continues tomorrow.
Executive Decision: Chuck Bunch
For his "Executive Decision" segment, Cramer spoke with Chuck Bunch, chairman and CEO of PPG (PPG), the specialty chemical maker that has seen its shares rise 358%, including reinvested dividends, since Cramer first got behind the company in June 2009.
Bunch said that despite today's headlines, he feels good about PPG's prospects in China. He said business remains good and the company expects a solid first quarter from the region.
In addition to China, Bunch was also bullish on America, saying U.S. commercial construction is finally making a comeback, albeit a slow one. He said things are improving regionally, with the South being the strongest U.S. region at the moment.
Finally, there was also positive news from another troubled region of the globe, Europe, where Bunch noted that PPG saw an encouraging fourth quarter with no volume declines. He said the European auto business is starting to show signs of life, which is very encouraging.
With all of those positives, Bunch said PPG has plenty of cash on hand for acquisitions or returns of capital to shareholders in 2014. Cramer said that even with some weakness in China, PPG has a lot to like elsewhere in the world.
A big part of investing is knowing who to trust, Cramer told viewers in his Thursday "Sell Block" segment. That's why when colleague Herb Greenberg raised the red flag on Valeant Pharmaceuticals (VRX), Cramer took notice.
Shares of Valeant are up 112% over the past 12 months, and this beloved stock currently has 16 buy ratings, two holds and just one sell -- making Greenberg's bearish case the minority view.
But according to Greenberg, we've seen the Valeant story many times before and it always ends very badly for shareholders. At issue: Valeant's voracious appetite for growth via acquisition. The company has done no fewer than 60 acquisitions in the past six years but, as Greenberg noted, the company will need many, many more to achieve its self-stated goal of becoming a top-five pharma player by 2016.
Growing by acquisition is not inherently a bad thing. What was worrisome to Greenberg was the fact that Valeant's organic growth actually fell by 9% last quarter, with guidance coming in at the low end of expectations. With organic growth faltering, Valeant will have no choice but to start issuing more stock to pay for its continued growth, thereby diluting existing shareholders. Otherwise, the company risks having its growth stall, a scenario which would also be determential to shareholders.
Cramer said the term for companies that grow only via acquisition is a "roll-up" company, and while there are some success stories, they all hinge on making successful acquisitions that continue to grow organically afterwards. That's why Cramer said if Greenberg is worried, he is, too.
For the next installment of "Cramer's Playbook," Cramer's series that hopes to increase everyone's financial literacy, Cramer turned the focus to company sponsored 401(k) plans, answering the question, "should I invest in my company's 401(k) plan, or put my money to work elsewhere?"
There are many advantages, and disadvantages, to 401(k) plans, Cramer explained. 401(k)s grow tax deferred, and many employers offer a match, which is free money. Using the power of compounding, if you invested $5,000 a year starting at age 30, by the time you turned 60, your $150,000 next egg would have grown to over $511,000 given just a 7% annual return, Cramer explained.
But 401(k) investment options vary widely from employer to employer and many offer high or hidden fees that over time can put a serious dent into your returns. That's why Cramer advocated investing in 401(k)s only up to the employer match and only if the investment choices are acceptable. If not, invest in a self-directed individual IRA, where you're allowed to invest $5,500 per year.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer weighed in on eBay (EBAY) and whether activist investor Carl Icahn's view that the company should be split up makes any sense.
Cramer said eBay makes a good case that its auction business helps Paypal, its payment arm, grow and vice versa. But there's no denying that eBay's share price has been stalled for a year, severely lagging that of other payment processors including Visa and MasterCard (MA).
With eBay only delivering good, not great, growth, Cramer said he understands Icahn's view that splitting up the company would bring out a ton of value for shareholders.
Cramer said Icahn has a great track record of late, having invested in Netflix (NFLX) at $60 a share and Hain Celestial (HAIN) nearly $60 ago. That leads Cramer to think this activist may be onto something when it comes to eBay.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt