Stocks have had a rough week.
The Dow Jones dropped more than 250 points on Thursday—bringing its five day loss to nearly 1%—while the S&P 500 and Nasdaq both dropped 0.86% and 0.72%, respectively, today.
Thursday’s losses came amid growing fears that the COVID-19 delta variant could potentially slow the economic comeback, and as Japan declared a state of emergency in Tokyo for the upcoming Olympics as COVID cases rise globally due to variants and the U.S. reported a disappointing jobs report that hinted that the rapid job growth seen in the first half of the year could slow over the months ahead.
The heaviest losses were seen in companies that would see the greatest benefit from an economic reopening, including cruise companies, airlines, and brick-and-mortar retailers.
“It feels like we have moved from thinking inflation will be transitory, to fearing growth will be transitory,” said Art Hogan, chief market strategist at National Securities.
But while the broader market struggles, CNBC’s Jim Cramer said investors should be looking for buying opportunities now.
“Remember the three types of stocks to buy on down days: the ones that rallied anyway, the ones where you’re finally getting a long-awaited pullback, and the ones that got recommended but failed to rally because of the bad tape,” Cramer said. “Take your pick [or] do all three, just so long as you approach the sell-off not as a reason to panic but as an opportunity.”
In particular, Cramer has his eye on Apple (NASDAQ: AAPL), which is up nearly 5% over the last five trading days, and Amazon (NASDAQ: AMZN), which has gained 8.64% including just under 1% on Thursday alone.
For a stock to buy on a “long-awaited pullback,” Cramer recommended Devon Energy (NYSE: DVN) given that it has fallen more than 8% over the last week. And as for a company that has failed to rally—even on good news—due to market conditions, Cramer likes American Express (NYSE: AXP), which got an upgrade from Goldman Sachs this week but still dropped 2% on Thursday.
“Think of these stocks as textbook examples of what you can buy on a down day,” the CNBC host said. “When people buy stocks, we almost never nail the timing. When you buy a stock at the exact bottom, I’m calling that a miracle. Much more often, you end up buying it too early or too late. So you have to leave room, that way if the stock goes down you won’t panic and sell. Instead, you can just take the pain in stride and buy more of a good company at a lower level.”