Jim Cramer shares 4 falling stocks to buy right now | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The price of company’s stock, at least in short-term, often has little connection with the actual performance of the company.

Many big names, in fact, will see their stock drop after they report positive earnings. Even when then numbers are very good this can happen because the market had already assumed the numbers would be positive, so the gains from that had already been priced in.

Sometimes it seems like even in a sea of good news, a tiny island of bad news can send a stock downwards.

In many ways, stocks are like sports. The better team usually wins, but there are upsets, and a partial score does not always reflect the final results.

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Apple has been famous for this. It can report stellar numbers across the board, but if Tim Cook makes a small comment on potential supply chain issues delaying the new iPad, the stock may fall.

Jim Cramer, who under all the bluster, often serves as a voice of reason for the stock market, has named four stocks that are falling, but are still good buys. These are companies facing short-term headwinds that have clearer sailing long-term.

Cramer may yell a lot, but he’s a smart stock market analyst (usually)

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Buy when good stocks are cheap(er)

Cramer told his CNBC audience on July 11 that it’s important to understand why a stock has fallen. Sometimes, it’s due to inherent weakness in the company. In other cases, it’s for a more trivial reason that does not dim its long-term prospects.

He noted that when a stock falls for reasons that don’t change the buy thesis for the company, that’s a time for investors to strike. It’s one of the rare times you buy quality at a bargain.

“The great ones never come cheap. But…they can be cheaper from where they were. Sometimes all you can hope for is get a chance to buy a stock of a terrific company at a discount when the market is at an all-time high,” he shared on his show.

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Of course, it can be a challenge to identify when a company is falling for a trivial reason and when something has inherently gone wrong with a brand. Short-term perception can sometimes have a long-term impact, but that just creates a longer buying opportunity.

Perhaps most famously, Chipotle saw it share price drop for over a year during and after its E. coli scandal. It did not matter that the company handled the food safety issue well or that it remained an inherently strong business, the market punished it for a relatively minor mistake which created an opportunity for disciplined investors.

Buy these 4 falling stocks

Cramer named four stocks that are top buys and incredibly strong long-term brands that are struggling at the moment. This has caused their prices to fall, creating a major buying opportunity.

Home Depot (HD) : The giant home improvement company has been hurt by potential weakness in the housing market. In reality, when people move less, they spend more on home renovation. It’s a cycle where Home Depot cashes in one way or the other.
Costco (COST) : Costco faces the same tariff concerns as every retailer and its recent sales number were lower than some hoped for. But, membership sales and retention, really the only numbers that matter for the chain, remain at near-highs and that’s what actually drives the business.
McDonald’s (MCD) : The fast-food giant has struggled with perceptions over value and consumers just staying home. It, however, has a strong pipeline, and its recent downturn was just a mild dip of its already stellar numbers.
Starbucks (SBUX) : New CEO Brian Niccol has stumbled a bit in his relationship with the chain’s employees. He tightened the chain’s dress code and offered bonuses to management while workers are not satisfied with their wages. Still, his plan to bring people back into stores, focus more on coffee, and simplify both the menu and its production, are the right plays in the long-term.

Disciplined, long-term investors focus on the underlying pillars a company is built on,. not any short-term noise. In the end, the cream usually rises to the top and being able to buy these brands at a discount should be a massive long-term asset to your portfolio.