Cramer: The market may sell off more — buy these stocks on a dip

• "I think the broader market could go lower, and if you're patient, you'll be able to pick up most of these names — maybe not the gold stocks — at a discount," CNBC's Jim Cramer says.
• "Maybe raise a little cash in your high-flyers, if you don't have enough already, and then get ready to do some buying as we will even get through this after some painful adjustment," the "Mad Money" host says.
• "People will keep buying precious metals as insurance against economic chaos," he says.

CNBC's Jim Cramer said Thursday there's no need for investors to dump their entire portfolio in the face of the escalating U.S.-China trade war.

A new round of trade talks between the two countries this week did not yield a breakthrough. After the talks in Shanghai ended, President Donald Trump declared that he will be slapping a new round of tariffs on another $300 billion of Chinese imports on Sept. 1.

U.S. markets sold off on the news. The "Mad Money" host suggested the drop will create buying opportunities in companies that won't be hurt by the new duties.

"I think the broader market could go lower, and if you're patient, you'll be able to pick up most of these names — maybe not the gold stocks — at a discount," he said. "For now, you just need to keep your head down. Maybe raise a little cash in your high-flyers, if you don't have enough already, and then get ready to do some buying as we will even get through this after some painful adjustment."

Cramer highlighted companies in the following industries:

Tech and cybersecurity

Tech stocks, outside the cellphone space, can meet expectations in a slowing economy will be worth buying, Cramer said. He mentioned Alphabet, Facebook and Netflix among them because they can't do business in China.

"The tariffs arguably make Amazon even more valuable because it's a cheaper alternative to the more vulnerable brick-and-mortar chains," he said.

Cramer said growth stocks in cybersecurity can also work in this environment. He highlighted CyberArk and Cisco, which has pulled much of its operations out of China.

Financial technology is another sector to own.

"The large banks are always considered to be vulnerable in a slowdown," Cramer said, "but money managers still need financial exposure, so they swap into fintech. MasterCard and Visa have zero credit risk, so they're magnets for money."

Companies with scale

Shares of Yum Brands, the parent company of KFC and Pizza Hut, set a 52-week high and closed the session nearly 4% higher after reporting an earnings beat. The stock can be bought into weakness, Cramer said.

Retail giant Costco is another asset worth picking up.

"It's not in China and, as we've seen from the last year, the previous tariffs had no real impact on their numbers," he said.

Defense contractors

Cramer said defense contractor stocks work as a "knee-jerk trade."

"L3Harris just had a nice move up, great quarter," he said, "but it's my favorite in the group. I still think it's cheap."

Pharmaceuticals

Drug companies that offer good dividends are places to put money, Cramer said.

"Merck had, by far, the best quarter. It's worth considering," he said. Same with Novartis, which reported terrific numbers."

Gold

Investors need exposure to gold. Agnico Eagle Mines and Barrick Gold are two of Cramer's suggestions that can be bought now.

"People will keep buying precious metals as insurance against economic chaos," the host said. "It's the classic safe haven for your wealth, and that's terrific for the gold miners."

Disclosure: Cramer's charitable trust owns shares of Cisco Systems, Amazon, Facebook, Alphabet

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