Cramer Remix: How investors can use earnings to their advantage in this sell-off

  • CNBC's Jim Cramer explains how strong earnings can take the guesswork out of your next investment.
  • The "Mad Money" host also hears from a former Victoria's Secret executive who now runs a cannabis company.

Sell-offs that occur during earnings season often provide great opportunities for investors to build positions in top-notch stocks, CNBC's Jim Cramer argued Thursday as the market compounded its monthly losses.

"In a sell-off during earnings season, you can't have a lot of guesswork. You want to be sure you're buying companies that you absolutely know are doing well," the "Mad Money" host said. "That's what's so great about sell-offs in the reporting period: you've got the perfect shopping list because the companies have just told you exactly how they're doing."

And while the sell-off might not be over yet, as Cramer's colleague and technician Mark Sebastian predicted on Tuesday, Cramer spotted some stellar buying opportunities in the widespread weakness.

"I think these are levels, if you have a lot of cash, where you can pick a stock and start nibbling," he said. "You want a high-quality situation at a discount, where you know the merchandise isn't damaged, just the stock."

Right now, four stocks fit the bill, Cramer said. Click here to see his recommendations.

The Fed's making 'a mistake,' Cramer says

Federal Reserve Board Chairman Jerome Powell speaks during a press conference in Washington, DC, September 26, 2018. 
Saul Loeb | AFP | Getty Images
Federal Reserve Board Chairman Jerome Powell speaks during a press conference in Washington, DC, September 26, 2018. 

Stocks tanked on Thursday because people are finally realizing that the Federal Reserve has the power to hurt stocks and slow the economy, Cramer said after the Dow Jones Industrial Average fell more than 300 points.

"This is one of those moments where it's dawning on people that maybe all the assurances that we don't need to be afraid of the Fed are being proven to be totally bogus," he said.

Behind those assurances are two "lousy" theories, Cramer said: the idea that more rate hikes are necessary because the U.S. economy is close to full employment, and the idea that the rate hikes won't hurt the market because they're already "baked in."

If hourly wages were skyrocketing, Cramer said he would understand the need to raise interest rates four more times, as the Fed has said it plans to do. But with millions of workers at risk of losing their jobs from bankruptcies — see Sears' recent turmoil — or new technological applications that make certain jobs redundant, he didn't see the incentive.

"There's no cause for the Fed to tighten four more times. None," Cramer said. "This is what all this turmoil's about in the market. They're taking preemptive action because they're afraid of potential inflation. I think that's a mistake. The labor market's taken a decade to recover from the financial crisis. Why not give it some more time?"

Click here for his full analysis.

Cramer's power ranking for the tech sector

Tim Cook
Tim Cook

Cramer wanted to reaffirm his faith in the technology sector as the tech-heavy Nasdaq index took Thursday's sell-off pain head-on, dropping 2.1 percent amid marketwide weakness.

So the "Mad Money" host decided to continue his "power rankings" of stocks with the most investment potential in each sector with the information technology space, the single largest sector in the S&P 500.

"On the one hand, tech's still the second-best-performing sector in the market right now, right behind health care," Cramer said. "On the other hand, it's been annihilated over the past few weeks."

Click here for the stocks he sees as the most investable right here, right now.

Longtime retail executive talks breaking into cannabis space

Marijuana buds on display at The Farm Co. in Boulder, Co.
David A. Grogan | CNBC
Marijuana buds on display at The Farm Co. in Boulder, Co.

Cannabis retail in the United States is fraught with "points of dissonance" in the stores that exist today, retail industry veteran Peter Horvath, who now runs a cannabis-focused consumer products company, told CNBC on Thursday.

Horvath, a former L Brands and American Eagle Outfitters executive whose newest employer, Green Growth Brands, will come public later this year, said he realized this when he visited 100 cannabis stores in the United States on a mission to understand the landscape.

The idea was to visit all of them quickly "so that, eventually, you can see what the patterns are," Horvath told Cramer in an exclusive interview.

"In most retail experiences, there's too many points of dissonance. In cannabis, it's the same, except they're even more extreme," the CEO said. "There are things to admire, but generally, every single store is underperforming its true market potential."

Click here to watch and read more about his full interview.

Lightning round: Cramer's 3M worry

In Cramer's lightning round, he raced through his take on callers' favorite stocks:

3M Co.: "It's down $59 bucks from its 52-week high. Now, I have to tell you, in pure candor, I discussed with [TheStreet analysts] Zev Fima and with Jeff Marks today whether we shouldn't trim the position ahead of the quarter for our charitable trust and tell the club members that we're less certain. It's already a small position. I am very concerned about the Oct. 23 report if they do not do a restructuring. I think it'll be disappointing. I'm putting it out there."

Brinker Intl.: "I've always been a fan, but I have to tell you, the stock that everybody likes right now is McDonald's. I'm not going to back away from that. I am also a fan of Wendy's."

Disclosure: Cramer's charitable trust owns shares of 3M.

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