CNBC's Jim Cramer on Thursday said investors should judge quarterly reports this earnings season on a nontraditional metric: "not as bad as feared."
Many stocks have fallen so far off their highs that the conventional "better-than-expected" measure won't do the trick, said the "Mad Money" host, who based his thesis on the estimates-beating quarter that PepsiCo turned in earlier that day.
The beverage producer's stock had fallen nearly $4 heading into earnings.
"Yesterday, Wall Street was concerned that PepsiCo would fail to deliver better-than-expected numbers," Cramer explained, but the "results were not as bad as feared."
"It was a NABAF quarter, with strong sales in both food and beverages," he continued. "While the company didn't raise its forecast, the stock had already been hit so hard going into the report that this didn't really bother anyone."
PepsiCo's shares rallied nearly 3% in the session to new all-time highs.
Cramer said, "When the market gets this oversold, it can act like a coiled spring with stocks rallying beyond where you'd ordinarily expect them to go on good news."
Cramer went on to predict that J.P. Morgan, American Express, Abbott Laboratories, Merck, Starbucks, Facebook, CVS and Shopify are companies he considers could deliver NABAF quarterly numbers. Many more stocks can be added to the same bucket, including high-quality ones that are down big, he added.
"I don't know if the market's done going down, although I think we saw an important moment of capitulation during this morning's breakdown, but the [S&P's short-range] oscillator's still not as low as I'd like," the host said.
"Here's the bottom line: When the Labor department releases its big employment number tomorrow, I bet there will be some sellers," Cramer said. "To me, that's the perfect moment to pick up some of these NABAF names, betting they'll be, well, not as bad as feared."
Disclosure: Cramer's charitable trust owns shares of PepsiCo, Abbott Laboratories, Facebook, CVS and J.P. Morgan.