Higher-quality stocks are harder to find – they rarely drop enough to qualify as cheap – so Cramer recommended looking to secondary equity offerings for good deals. Both Ford Motor and BB&T , the ailing Southern regional bank fraught with bad loans, issued new shares on May 13, 2009, at significant discounts to their prior-day and prior-week trading prices. Cramer called these stocks mediocre at best, but the deals would have made you money because the price was right.
Advanced Micro Devices might be the best example of this kind of trade. After 22 years of hating AMD, Cramer told viewers to hold their noses and buy the stock at the end of 2008 when it traded for $2. By then the company had agreed to sell its problematic foundry division and its graphic-chip division was starting to take share from Intel and NVIDIA , making for a great buying opportunity. Sure enough, the stock doubled in just a few months.
Price forces you to make new judgments about bad merchandise, Cramer said. So remember: Cheap works just as well.
Cramer's charitable trust owns Bank of America.
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