Investing is all about identifying patterns, Cramer said Tuesday.
Take the sell-off in Core Laboratories , for example. The high-tech oil service company helps oil and gas producers figure out where to drill and how to get more out of their wells. Cramer has long pushed this stock, but never recommends buying shares before it reports. Investors should always wait until after it reports to pull the trigger, he said. After all, this stock tends to fall after it reports earnings. It’s happened the last four of the five quarters and again on Tuesday.
This time, Cramer admitted the quarter wasn’t perfect. It delivered 90 cents of earnings per share, which is a 2-cent beat. Much of it came from lower taxes. Revenues came in better-than-expected, but its production enhancement margins slipped during the quarter and that caused some investors to freak out.
“The real reason Core Labs sold off, though, is the same reason why it almost always sells off after earnings: because the stock ran up going into the quarter and became priced for perfection,” Cramer explained. “So when Core Labs then reports results that aren’t quite perfect, the stock gets hit.”
Cramer thinks this stock will bounce back because the oil service sector is on fire. He recommends buying this stock into weakness.
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