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Cramer urges investors to use the late-January rally to sell stocks in unprofitable companies

CNBC’s Jim Cramer said on Tuesday that now is the time to drop stocks of unprofitable companies.

“This is your chance to rid yourself of those companies … that have no revenue, no earnings, all 50 times the sale,” Cramer said on “Squawk on the Street,” referring to stocks that sell at high price / sales ratios. “They are all, take advantage of it,” he added, reiterating his 2022 mantra of investing in companies that generate profits.

Cramer’s comments come as stocks were relatively stable Tuesday after Wall Street closed a gloomy January with a powerful two-session rally that caused many growth stocks to jump higher. Despite its two-day rise of more than 6.5%, the Nasdaq remained firmly in the correction range – down 12% from its highest level in November.

Investors should also look for companies that are able to cope with supply chain problems, said the “Mad Money” host, pointing to manufacturing company Stanley Black & Decker as an example.

“They had terrible supply chain problems, but they still managed to reach the numbers. They passed on many of the costs,” Cramer said, explaining that companies that are able to strategize their way across obstacles and into profits are also worth investing in.

Cramer last month called an investment in companies that sell tens of thousands of times their sales “an invitation to take your money and put it in the fireplace,” and advise buyers to take their cash to established U.S. companies instead.

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