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Cramer—Play the big trouble in not-so-little China

Jim Cramer stood in awe at what good management can really accomplish, when he looked at the earnings of various companies on Friday.

Unfortunately those earnings were obscured by fear among the broader averages on what it could mean if China really collapses.

"I can't rule out a Chinese collapse. When I see commodities in a free-fall and all of this negative data out of the most populous country on Earth, I know that I can't ignore it," the "Mad Money" host said.

After all, those who were oblivious to the shenanigans of Greece paid a heavy price—and China is a heck of a lot larger than Greece.

Read MoreGreece submits request to IMF for new loan facility

Many portfolio managers now believe that China could fall apart to the point where it could take down the rest of the world with it, but Cramer's not that pessimistic.

Instead, he prefers the approach to the unraveling of China the same way he does when the market has a down day. He would rather use this selloff as an opportunity to buy high-quality companies with strong management that will ultimately be dragged down, even if they don't have any Chinese exposure at all.

'Going bust left and right'

A Cincinnati Reds player wears Under Armour batting gloves during a game in July.
G. Fiume | Getty Images
A Cincinnati Reds player wears Under Armour batting gloves during a game in July.

Yet there are some massive headwinds out there. Cramer recognizes that there is narrow market leadership, and commodities are falling like a rock, which means that China could pull down the whole world.

While the U.S. has strong employment growth; that could mean the Federal Reserve will raise interest rates.

"The oils are rolling over in an almost unnatural way. I suspect that hedge funds will be going bust left and right," Cramer added.

All of these headwinds mean to Cramer that is okay to have a lot of cash. He just raised some on Friday for his charitable trust. So with this in mind, what stocks does Cramer recommend?

Think about what happens when world markets come out on the other side of this debacle. Cramer went straight to those companies with strong management. The selloff will ultimately hit Starbucks, Google, Amazon, Under Armour and Netflix—but the drop will be short-lived. Cramer believes it represents a buying opportunity, as the shares will likely recover quickly from any dips.

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These stocks have all been rising to the top lately, but Cramer wants investors to be ready to take advantage of them the moment there is a terrific buy into weakness.

After all, they don't sell iron ore at Starbucks.

"No, I'm not being a Pollyanna. I don't like this market any more than you do. I'm just saying that the Chinese ugliness coupled with the endless talk of a Fed tightening and the superfreakin' strong dollar might allow you to buy the stocks of well-managed companies at prices you might not get otherwise," Cramer said.

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