The Dow Jones Industrial Average had a rough year in 2018, shedding 5.6 percent of its value as volatility gripped Wall Street, but CNBC's Jim Cramer likes the 2019 prospects for some of its components.
The 30-stock index saw its largest annual loss since 2008 last year, dragged down by concerns tied to the Federal Reserve, the Trump administration's trade dispute with China and a potential global economic slowdown.
Out of the Dow's best and worst performers the final quarter of 2018, "many" are actually buys, Cramer said Friday as stocks surged on Fed Chair Jerome Powell's announcement that he would be "patient" with his market-moving interest rate policies.
"You can understand why we rocketed higher today," the "Mad Money" host said. "Many of these Dow stocks have already been humbled. Many of them are buys."
The winners
The Dow's top five stocks for the end of 2018 were a defensive group: consumer products giant Procter & Gamble, drugmaker Merck, fast-food chain McDonald's, telecommunications play Verizon and soft-drink maker Coca-Cola.
"Classic slowdown stock" Procter & Gamble took first place with a 10 percent gain, a troubling sign for those who are worried about U.S. economic growth, Cramer said.
"When Procter's the best performer, you know something's wrong with that economy," he said, acknowledging that the Bounty parent is still a "high-quality company" and has benefited from lower raw costs and higher market share.
"This is exactly the kind of stock you want to own if you're concerned about a slowing economy," Cramer said.
Cramer also blessed buying shares of runner-up Merck, the drugmaker behind leading anti-cancer treatment Keytruda. He noted that Bristol-Myers' massive deal to buy Celgene speaks to the power Merck wields over its competitors.
"They never would've done something so radical if Merck weren't winning some head-to-head trials against them," he said. "Plus, Merck sports a 2.9 percent yield here, it's got a rock-solid balance sheet, and, just like Procter & Gamble, it's a fabulous slowdown stock. You have my blessing to still buy this into weakness."
Cramer liked McDonald's, noting that its stock also tends to thrive during slowdowns. He dubbed the stock of Verizon, which sports a 4.3 percent dividend yield and has no exposure to the Chinese markets, an outright "buy."
Coca-Cola, the only other Dow stock that rallied in the final months of 2018, "is practically the perfect stock for this environment," Cramer added, noting that it looks cheap considering its 3.3 percent yield and accelerating growth.
The losers
The Dow's worst year-end performers were slightly less uniform: iPhone maker Apple, investment bank Goldman Sachs, tech titan IBM, industrial giant United Technologies and energy play Exxon Mobil.
Apple sank the most — down 30 percent for the fourth quarter — as the consumer tech company struggled to fend off worries about its China business, iPhone sales and new earnings layout. Cramer still liked its growing ecosystem of services, but acknowledged that things will likely get worse for Apple before they get better.
The company's recent guidance cut "means that you need to wait at least 30 days before you buy the stock, because no company bothers to pre-announce to the downside if it believes that things are about to get better," he said. "Talk to me in a month."
The "universally loathed" Goldman Sachs, however, has become "incredibly cheap" after its 25 percent fourth-quarter decline and should be bought at its current levels, the "Mad Money" host said. The investment banking giant has been embroiled in a scandal involving the Malaysian government that has weighed heavily on its shares.
"You need to buy it, and then be patient," Cramer said. "The Malaysian nightmare? It will eventually end. [...] I think that you'll wish you owned some Golden Slacks when it's done."
Cramer was "on the fence" about IBM, saying he wanted to wait to see how its acquisition of cloud company Red Hat would play out. He also advised taking a wait-and-see approach to United Technologies ahead of its three-way split, even as he said it was "downright ridiculous" for the stock to be performing so poorly.
Exxon Mobil's stock is one for the speculators, particularly those who think that oil prices are nearing their bottom, Cramer said, flagging the oil and gas play's large 4.6 percent yield.
"I think oil's bottoming here. I said that at the $44 level," he said. "If that's the case, you could buy Exxon."
Final thoughts
The tail-end of 2018 may have been brutal, but that doesn't mean 2019 won't offer some opportunities to make money, Cramer concluded.
"Every time I hear some commentator predict that 2019 will be a disaster, I think about how the end of 2018 was so horrific that it brought the averages down to pretty tempting levels, provided you're looking to own stocks for the long-term and you're willing to be patient," he said. "Maybe after today, we can finally accept that patience can be a virtue."
WATCH: Cramer on Dow's best and worst stocks in Q4
Disclosure: Cramer's charitable trust owns shares of Apple and Goldman Sachs.
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