Mad Money

Cramer’s fallback stocks as market get clobbered

The biotech beating

(Click for video linked to a searchable transcript of this Mad Money segment)

"These are the kinds of stocks you can fall back on, in moments where the market gets clobbered," said Jim Cramer .

The Mad Money host was talking about biotech, a sector that he thinks not only presents a major long-term theme, but also has little exposure to the potential crisis brewing in emerging markets.

"The only reason that biotechs are getting killed right now is because they were up huge going into the crisis. In every big decline, the stocks that had been up the most get hit the hardest, even if they don't deserve it," Cramer said.

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Jim Cramer is a fundamental investor, and despite financial woes in China, he says "little has changed for most biotech companies. And after the current squall of selling is over, I bet these stocks will bounce right back. In other words, the hideous decline we're seeing in all things biotech is creating some fabulous entry points."

In the sector, Cramer has been a longtime fan of Celgene, Gilead, Biogen Idec, and Regeneron, stocks that he calls the 4 horsemen of biotech. "You have my blessing to buy any of them, into weakness here," Cramer said.

If, however, you're interested in stocks that could have more torque Cramer suggests two smaller biotechs that are somewhat more speculative.

Specifically, he likes Isis Pharmaceuticals and Jazz Pharmaceuticals.

"These two companies, worth $5 billion and $8 billion respectively, fall somewhere in between your typical one-drug wonder super speculative biotech, and the titans that are the four horsemen," Cramer said.

For Isis, Cramer sees a slew of potential catalysts including 28 drug candidates in its pipeline with many of these drugs altering the RNA in a patient's cells. These drugs could be ground-breaking.

In the case of Jazz Pharmaceuticals Cramer says the catalysts may stem from "a drug for acute lymphoblastic leukemia currently on the market, with another leukemia drug in the pipeline. Plus, Jazz is working on a treatment for graft versus host disease, where the body rejects transplanted tissue—this one's in phase 3 and it could be a very big deal."

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Cramer believes any and all of the stocks mentioned above warrant attention. However, because a broad sell-off will like drag these stocks even lower, he also says the best strategy is to establish a new position slowly.

"You want 100 shares? I say 25 might be in order into now," Cramer said. "Then watch and increase your position strategically. I think we're looking at an entry point, but it's the first of many."

Call Cramer: 1-800-743-CNBC

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