Investors have been selling in August, leading to double digit drops for some big market names.
But CNBC's Jim Cramer sees some of these selloffs as a golden opportunity to buy, so Cramer put together a list of five companies -- each with a double digit drop in August stock price -- that he feels are currently underrated.
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Cramer recommends investors buy into airlines with the best international exposure, and for him that means Delta Air Lines, United Airlines, and American Airlines (AAL) -).
"While it is my least favorite of the three, American sells for less than 5x this year's earnings estimates. Wall Street clearly thinks the numbers are about to fall off a cliff... so if they just hang in there kind of close to where they are right now I think the stock is going to go higher because it has such a cheap valuation," Cramer said.
Bank of America (BACXL) -) shares are down about 11% in August, but Cramer sees the decline a definite buying opportunity
"Every time the Fed tightens, Bank of America immediately get higher net interest margins, making them more profitable," Cramer said while pointing out the stock sells for less than 1.3x its tangible book value, which is a "huge discount" from its long term average.
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"I'm worried about the smaller regional operators, but I'm not worried about Bank of America," Cramer said.
Jim Cramer hasn't been big on the videogame space in a while, but one popular company has caught his eye and that is Electronic Arts (EA) -).
The stock of the studio behind the popular Madden franchise is down more than 12% in August thanks in part to weak guidance.
"I'm more focused on the fact that EA actually raised its full-year earnings forecast. I think they've been doing pretty well given that this has been a tough environment for the videogame industry," Cramer said.
Cramer's fourth pick is a not-so-well known company called Ball Corp. (BALL) -) that makes metal packaging for food, beverages and household products.
Falling aluminum prices gives the company less pricing power and has resulted in a 10% drop in August, representing a buying opportunity.
"First of all these guys operate in what is basically an oligopoly, meaning very limited competition. They have nearly 40% market share in metal packaging across every region where they do business," Cramer said.
Also, the company just announced the sale of its non-core aerospace division for $5.5 billion in cash. Ball will use the cash to pay down debt and buy stock, making shares more attractive.
Cramer next recommended heavy duty engine maker Cummins (CMI) -) as a smart buy despite its 12% decline in August.
"Lately I've been recommending Cummins because they've made major strides in hydrogen engines. It's going to take a long time for that part of the story to play out, but they're already doing plenty in hydrogen right now," Cramer said.
Check out the full video segment below.
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