Mad Money

Cramer's secret oil strategy: Unlock profits

Cramer: Dazed and confused market

Oil hit new lows on Monday, finally breaking the basement level of $80 that it has been tiptoeing around for days. And while the Dow Jones and Nasdaq did close slightly up for the day, most of the trading day was spent in the red.

In a dazed and confused market, there are still ways to profit from low prices of oil, and Jim Cramer thinks it is time to adjust perspective. It is just a matter of using some common sense and realizing that just because oil is down that doesn't mean the economy is slowing down.

"Lower oil is like lower taxes. It's a huge win. Which is why the central premise that the market must go down on oil's weakness is just hogwash," the "Mad Money" host said.

Cramer believes that oil is going down, simply because of massive amount of it sloshing around the world. It's a game of demand and supply. OPEC hasn't slowed production in hopes of reducing oil independence in the U.S. and is driving prices lower.

Jim Cramer on Mad Money.
Adam Jeffery | CNBC

Now is the time to think like an insider and take the gains that can be made from lower oil. Cramer recommends focusing on companies that benefit from lower oil prices but don't require consumer demand to stay strong.

How about Pepsico, Kimberly Clarke and Procter & Gamble? These companies use oil to make their products, and burn gasoline to get them to the market.

Airlines are another option that he recommends. As we know from the earnings reports, the lower oil prices directly benefit their bottom line and could be a winner.

Also, what about freight forwarding companies? Under this theory, stocks like United Parcel Service and FedEx will definitely profit as well, Cramer says.

There are also a few alternative opportunistic theories in the marketplace that could have benefit. Some analysts recommend buying drug companies like Gilead and Regeneron.

"Makes sense, in a real slowdown, perhaps the only things that must get bought are the life-saving drugs of the biotechs," added Cramer.

Read more from Mad Money with Jim Cramer
Cramer: Oil decline obscured important discovery
Cramer: As stocks slide, should strategy shift?
Cramer: Time to shop the drop

Another suggested approach would be to buy companies who have reported good earnings recently. How about Seagate, or Micron as a few tech ideas?

Regardless of what stocks investors choose, just remember Cramer's key to picking stocks: Companies that have good prospects for the future and are doing better than the average company, but haven't been discovered yet. He also recommends picking stocks that have strong fundamentals and are about to have self-help or a takeover.

In a market that doesn't make sense, it's time to change investor mindset and think opportunistically. After all to be an opportunist, you need to think like one. Cramer says your bank account will thank you at the end of the day.

Call Cramer: 1-800-743-CNBC

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