CNBC's Jim Cramer on Thursday said investors should be looking for damaged stocks, not damaged companies, in the event of a major sell-off.
"In this business, there's nothing better than readiness," Cramer said. "Having a shopping list of stocks you like that are being dragged down by the broader market makes it much easier to buy when the action is truly terrifying."
Cramer listed the names of six stocks that are worth looking at to buy on the way down:
- Microsoft: Cramer said the tech giant delivered a great quarter, seeing positive results from its cloud business, Azure. He also said he thinks the company's acquisition of Activision-Blizzard will be a "home run."
- WM: WM, formerly known as Waste Management, saw a boost in gross margins from its use of automation, Cramer said. He also noted the company has a "thriving business" in recycled natural gas from its landfills.
- Meta: Cramer praised Facebook parent Meta's most recent quarter but pointed out the stock is currently trading at a low price-to-earnings multiple. He said he likes Meta's Instagram, WhatsApp and Reality Labs. Meta's stock took a hit on Thursday because it reported weakened ad sales due to the Israel-Hamas war, but Cramer said he thinks this amounts to only a temporary setback.
- Procter & Gamble: Cramer called the consumer goods manufacturer a "textbook slowdown stock," saying the company will perform well even if the economy slows down.
- General Electric: Cramer said GE is the "fastest-growing aerospace play." He also praised the company's power division, saying its windmills are selling well and will be profitable.
- ServiceNow: Cramer said software company ServiceNow is the "de facto way to get in on the cloud" and is finding ways to save money through the use of artificial intelligence.
"There will be other stocks that will be worth buying into the eventual crescendo of selling," Cramer said. "Earnings season's still young, but those six are the ones that stick out so far. Put them on your shopping list and wait until the capitulation gives you much lower prices that are finally competitive with the bond market."
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Microsoft, Meta and Procter & Gamble.
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