CNBC's Jim Cramer explained the coronavirus-induced sell-off and broke down why investors should be alert that stocks can fall lower. The "Mad Money" host revealed promising parts of the stock market and others that are too toxic to invest in. The former hedge fund manager rattled off five questions investors must consider before buying stocks into weakness.
Though the Wall Street suffered one of its worse trading days in recent years, there are some bright areas in the stock market, CNBC's said Monday.
After the major indexes declined more than 3% on concerns of the coronavirus spreading across continents, the "Mad Money" host pointed to consumer staples, pharmaceuticals and utilities as stand-out sectors.
"I wish I could be optimistic about more groups, but I don't think it's worth the risk for many of them," he said.
Investors must take precaution about the stocks they want to put their money in because the coronavirus outbreak is disrupting supply chains of many companies, Cramer warned.
American businesses are "far too dependent" on manufacturing products in China, he said.
"I need to emphasize, again, that the big risk from the coronavirus outbreak has to do with interrupted supply chains and a concomitant business slowdown worldwide," Cramer said. "That means we have to be careful. You don't want to buy something that's about to have its supply lines cut."
Cramer shared five things investors must consider after Wall Street dragged through its worse trading day in two years.
After a tough day of trading, the host broke down five factors that can help investors determine whether now is a time to ditch stocks or gobble them up at a discount.
"Once you ask yourself [these] five questions, then yes, for some people it may make sense to start picking at beaten-down stocks, especially if they keep falling," he said.
"Don't try to be a hero, it's never worth it. By the way, there's no hurry. If you want to buy stocks into weakness, take your time."
In Cramer's lightning round, the "Mad Money" host broke down his thoughts on callers' favorite stock picks in rapid speed.
: "Well Cracker Barrel has been a stock that I have liked literally forever. It's just up on a spike. If it comes down, I'd be a buyer. I know that it is deeply related to gasoline prices and also to travel, but that's O.K. It's an inexpensive long-term holding."
: "I like the management changes. They're going heavily into the cloud, which is where I think they should be. It yields 4.4%, but it is not going to be the kind of stock that is just going to bounce right back 'cause it's just not like that. It's a big enterprise company."