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NEW YORK (TheStreet) -- It was a dramatic and nauseating week, Jim Cramer told his Mad Money viewers Friday as he laid out his game plan for next week's trading. Cramer said with the minefield that is earnings season upon us, investors should expect the volatility to continue.
Cramer said he'll be watching Citigroup (C) when it reports on Monday. No matter the results, the stock will likely get hammered since it offers no dividend protection.
Wednesday brings earnings from IBM (IBM) and Google (GOOG), two stocks Cramer owns for his charitable trust, Action Alerts PLUS. In the battle that is old versus new tech, Cramer expects IBM to fare well while Google may be under pressure as its perceived as expensive.
Also on Wednesday is another Action Alerts PLUS name, Bank of America (BAC). Cramer said by Wednesday he expects Bank of America to catch a bottom and would be a buyer on weakness ahead of the quarter.
Then, on Thursday, the last day of trading in a holiday-shortened week, both McDonald's (MCD) and Chipotle Mexican Grill (CMG), along with General Electric (GE), another Action Alerts PLUS name, and Pepsico (PEP) report.
Cramer noted the markets love McDonald's, even though Chipotle has the better business and better growth. Look for a battle to ensue over both Chipotle and Pepsico, he said, while GE may also see some selling as this stock is getting "tough to own."
Does Twitter (TWTR) hold the key to the market? Cramer said back in the old days he was always asked for that one stock that seemed to determine which way the market was headed. When asked that same question earlier today, Cramer said his answer was Microsoft (MSFT).
Why Microsoft? Cramer said because the markets hate high growth at the moment, and Microsoft is a safe, low-growth, low-PE name with a new CEO and new "cloud and mobile first" strategy that seems to be in fashion. Microsoft also affords investors a dividend cushion of safety on big down days like Friday.
The polar opposite of Microsoft is Twitter, a cool, hip company with no dividend and no earnings either. Twitter is insanely expensive, Cramer said, which is why the pain in this stock, as well as the many other high-fliers, is not over yet.
So if investors are looking for the keys to the market, Cramer concluded Microsoft and Twitter currently embody the yin and yang of investor sentiment.
Best for Your Buck Finale
For the final installment of his "Best For Your Buck" series, Cramer offered his pick for the best stock with a share price less than $10. That stock is drugstore chain Rite-Aid (RAD).
Cramer explained that shares of Rite-Aid are up 30% so far this year and have nearly doubled since he featured the stock in August of last year. The company just reported a two-cents-a-share earnings beat with better-than-expected revenue.
While this stock was all but left for dead last year, Cramer said this year the company has many tailwinds including the Affordable Care Act, which has created 14 million potential new customers with insurance. The U.S. population continues to trend older, he continued, and many brand-name drugs are coming off-patent, helping to boost Rite-Aid's margins.
But all those trends benefit all drugstores, Cramer said. Specific to Rite-Aid is the company's new store format, which now accounts for a quarter of its locations, as well as an uptick in flu shots, which helps get customers into those locations.
Trading at just 15 times earnings, less than its peers, Cramer said it's easy to see why this is the stock to own at this price point.
In his "Cramer's Playbook" segment, Cramer answered the question of what price-earnings, or P/E, ratio investors should be looking for in the stocks they buy.
Cramer said that investors should never just consider a stock's share price when making an investment decision. He said the P/E ratio, which is the share price divided by a company's expected earnings, is a much better metric to use.
However, even the P/E ratio doesn't tell the whole story -- a stock like General Mills (GIS) will naturally sell at a lower P/E than a Salesforce.com (CRM) because Salesforce is growing at a much faster pace.
That's why Cramer said the metric he prefers to use when valuing stocks is the PEG ratio, which is simply a company's P/E multiple divided by its growth rate.
As a general rule, stocks trading at twice their PEG rate are expensive, while those trading at less than one time their PEG rate are very inexpensive.
Cramer was bearish on Westport Innovations (WPRT).
Off the Tape
In his "Off The Tape" segment, Cramer spoke with Craig Weiss, president and CEO of the privately held electronic cigarette maker NJOY.
Weiss said he sees a world where traditional cigarettes are obsolete, replaced by electronic versions that are less harmful than combustable products. He said studies have shown e-cigarettes are not being used as a gateway to traditional cigarettes -- in fact just the opposite. Current smokers are using e-cigarettes to reduce or quit their smoking habit.
Weiss also said that despite the technology that's already a part of his company's products, there's still a lot more that can be done and it's an exciting time for the industry as e-cigarettes are becoming a true alternative to traditional ones.
When asked whether decisions at Target (TGT) and CVS Caremark (CVS) to stop carrying cigarettes in their stores help or hurt NJOY, Weiss said he commends any efforts to phase out what he sees as an obsolete and harmful product.
Cramer said companies like NJOY are exactly the types of disrupting technologies that investors should consider if and when they ever become publicly traded.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt