The market’s been hard on the financials, no doubt. But Cramer’s been just as wary of the industrial companies, too. China’s all but disappeared since the Olympics, commodities prices have plummeted, credit is still tight – there are myriad reasons to avoid the sector. But so much damage has been done that Cramer’s decided to start looking for opportunities.

Don’t get him wrong, Cramer’s still bearish. But if the markets and the business environment improve at all – say, by worldwide interest rate cuts, which Cramer said could possibly come next week – then some of these industrials could be worth buying.

The difference between buying them before this market morass and now, though, is that instead of focusing on earnings growth, investors should be judging these stocks on just two things: dividend yield and cash holdings.

Price-to-earnings multiples just don’t work in this environment, Cramer said. Industrials and mineral stocks are in danger of rate cuts, not increases, these days because their PEs are too high. So investors have to use a different strategy for valuation.

Earlier in the week Cramer recommended KBR

KBR loading...

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[KBR  Loading...      ()   ] for its huge cash position. While the stock traded at $15, $9 of that was in cash. So no matter how much of an earnings hit KBR takes, that’s still a very cheap stock.

As for dividend yields, these industrials are so beaten up that their once-miniscule payouts have increased significantly. We have the hedge funds to thank for that. Redemptions are forcing these funds to unload massive amounts of stock to raise cash, and that’s forcing share prices down. In turn, dividend yields go up. So industrials have gone from growth stocks to value and dividend plays, Cramer said.

For potential investments, he likes Nucor

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[NUE  Loading...      ()   ] and Freeport-McMoRan

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[FCX  Loading...      ()   ]. The former, a steelmaker, has fallen to $34.75 from $77 on June 25, sending the yield up to 3.6%. If the stock drops below $30, and with earnings estimates still high that’s a possibility, Nucor’s should work as both a value and dividend investment.

Freeport’s yield used to clock in at 2% when the stock was trading at over $100. But now that FCX is only fetching $44.86 the yield has jumped to 4.5%. There’s a chance Freeport could go lower, and if it sinks to the $30s then the yield increases to 5%. That’s better than Treasurys. There’s also the chance Freeport could pop 50% should China ever return to its previous levels of commodity demand.

Cramer’s bottom line: As tough as this market is, don’t shut your eyes to what opportunities actually do exist.






Jim's charitable trust owns Freeport-McMoran.

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