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Cramer: Don’t Run From This Buying Opportunity

Wednesday, 14 Sep 2011 | 7:02 PM ET

Never cut and run from a high quality stock just because one bad data point, Cramer said Wednesday. In fact, it could be giving you a chance to buy.

Anatomy of a Sell Off
Never cut and run from a high quality stock just because of one bad data point, says Mad Money's Jim Cramer. Case in point, consider what happened to Fossil and Lululemon.

“You have to recognize the opportunity that's right in front of you … rather than being ruled by fear,” he said.

Just look at names like Fossil , Lululemon, and Polo Ralph Lauren. They all had sell-offs, the “Mad Money” host noted, but have since rebounded. And if you bought in on the dips, you would have made some money.

When Fossil reported August 9th, it beat estimates for the quarter but warned that cost pressures would weigh on its second half result. Therefore, it slightly lowered the high-end range of its 2012 guidance. Since it had a track record of beating estimates and raising guidance, the stock got crushed. But the problems were about short-term cost issues, not long-run growth potential, Cramer said. Fossil has since bounced back to above where it was when it reported.

Lululemon also saw its stock sell-off after it reported Friday because some investors were worried about gross margin contradiction in the third quarter driven by higher labor and raw materials costs. But the company has years of growth ahead of it, Cramer said. The stock has already come back to close to where it was before the quarter.

Ralph Lauren’s stock took a tumble back after it reported back in May because investors were concerned about high sourcing costs affecting the company’s 2012 outlook. But again, after the dip, the stock quickly recovered.

“Ralph Lauren isn't the kind of company that can be derailed by higher costs because it has pricing power,” Cramer said. “It can pass those costs along to its customers.”

Those stocks have already rebounded, but you still have a buying opportunity with McDonald’s , Cramer said. The fast food company's shares fell after reporting what were seen as disappointing monthly same-store sales figures on Friday. But that’s not enough cause to sell, he said, because McDonald’s has terrific, consistent worldwide growth and fabulous management that’s “not vulnerable to the slings and arrows of global economic weakness.”

He suggests using the weakness to buy.

“Remember, when the stores are good ones and they throw a sale, you don't run from the merchandise, you buy it,” Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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