Earnings season can stir doubt even in some of the stock market's top performers, and Jim Cramer had to right the record when he spotted declines in four of his favorite names.
"Look, you need a healthy amount of skepticism to be a good investor, no denying that, but it's also important to know when to believe," the "Mad Money" host said. "I'm talking about buying the stocks of companies that have been left for dead because of a single bad quarter when the executives have proven time and time and time again that they can navigate rougher waters and right the ship."
With 4 percent organic growth and new products gaining traction, 3M's quarter was "good but not great" at worst, Cramer said.
"The culprit behind the sell-off? I think [CEO] Inge [Thulin] spoiled investors by giving them quarter after quarter of margin expansion, so this time, when we didn't get that and they missed the earnings by a penny, the darned thing got sent right to the slaughterhouse," he said. "Personally, I think it's nuts, especially when 3M promised some second-half improvement in the key health care division. So I suggest you use this opportunity to buy some shares in one of the highest quality companies out there."
Domino's Pizza's report had a similar effect on investors, who Cramer said were also spoiled by the technology-meets-delivery company's consistently strong quarters.
With 9 percent same-store sales growth trumping Wall Street's 7.9 percent estimate, Domino's report initially seemed strong, but weaker-than-expected international growth sent the stock tumbling.
"I think long-time CEO Patty Doyle deserves the benefit of the doubt here after everything he's done right for us over the years," Cramer said. "You really want to bet against him? Hey, be my guest — I'll gladly take the other side of the wager."
Hasbro's stock also got pounded despite the fact that its earnings report was mostly in line with analyst estimates, something that CEO Brian Goldner attributed to historically weak second quarters for the toy maker.
"I think Goldner's champing at the bit ahead of Hasbro's analyst meeting next Thursday, August 3, where he will lay out a timeline for what I expect will be an amazing holiday season. Plus, this quarter also caused the stock to get hammered last year, and you know what that happened to be: a terrific buying opportunity," the "Mad Money" host said.
Cramer argued that the Street was totally discounting management's involvement in the issue as well as its ability to monetize other parts of the business like YouTube, its data centers and its self-driving car initiative Waymo.
"You need to have some faith in companies' management teams that have delivered endlessly or you'll never ever be able to buy stocks at a discount. These four are giving you bargains," Cramer said. "They won't U-turn and go right back up. That doesn't happen. But I think all four are worth buying into weakness as long as you scale into them gradually on the way down, starting in tomorrow's session."