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Cramer: Commodity plays ready to shine

Just as Jim Cramer expected, the buyers came rolling in on Wednesday to scoop up many of the companies that represent high growth or tend to buy commodities by the bushel.

Earlier in the week, the "Mad Money" host warned this would happen, and it sure did. Meanwhile sellers continued to take down anything that smelled even remotely related to minerals, mining, oil or gas on Wednesday.

On Monday, there was a marketwide selloff directly correlated to the sudden decline in the price of oil. At the time Cramer made the point that there are two sides to every coin as the declining price oil meant that he expected the users of commodities to go up, not down.

Wednesday was also a painful day to own the oils, as inventory numbers showed a decline in crude. As a result, oil rallied hard until the dollar went higher. That stopped it in its tracks and reversed the group.

Cramer also saw that finally the markets reacted rationally, not out of stupidity. The same plays on cheap oil that were thrown away last week are ready to be bought this week.





A Dollar Tree store in Miami
Getty Images
A Dollar Tree store in Miami
"I need you to remember this kind of other-side-of-the-coin action. It's typical of day three after any extended commodity collapse" -Jim Cramer

"That means the stocks of big commodity buyers begin to shine. Why not? Their earnings will increase. So will the earnings of companies that benefit from a more flush consumer who feels better because gasoline is going lower," Cramer said. (Tweet This)

It was also a day for high-growth stocks, because they increase in value when inflation is subdued. Cramer reminded investors that something like gold, or even oil, will retain its value if inflation takes off. Paper assets like stocks only retain their full value when inflation is suppressed, like it is now.

That means that groups like retailers go higher. Cramer recommended plays on a consumer with more spending power, such as Costco, Dollar Tree and Wal-Mart.

Or how about large companies with huge energy bills, like PepsiCo, Clorox and Kellogg? Often the packaging for companies like these costs more than the goods they sell inside of it. They spend more to ship cereal than to make it.

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Low inflation also triggers Cramer to think about biotechs such a Regeneron and Celgene. He also thinks that investors will want to own internet stocks with great growth for the same reason, such as Facebook, Google, Netflix and Amazon.

"I need you to remember this kind of other-side-of-the-coin action. It's typical of day three after any extended commodity collapse," Cramer said. (Tweet This)

It might seem strange to some that investors are now willing to pay up for the stocks that were begging to be bought during the selloff. However, Cramer has seen it many times before. After all, fear is more powerful than common sense.

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