Start looking for CEOs who say their business is bottoming out.

CNBC’s Jim Cramer spent the first portion of the July 25 edition of Mad Money discussing earnings season – and how investors can dig up low-performing companies that soon should pivot to acceleration mode.

“Earnings season requires its own terminology,” Cramer noted in his Mad Money introduction. “If you don’t know them you don’t when stocks are going up or going down.”

One ingredient in Cramer’s secret sauce on earnings opportunities? Know when a company has had its last “bad quarter.”

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“If you want the most bang for your buck — but there’s also the most risk — you should try to anticipate the last bad quarter,” which means “you have to get in before management says business has bottomed,” Cramer said.

One real-life exhibit “A” for the ‘bad last quarter’ is healthcare and pharmaceutical company Danaher, which just closed $48 below its 52-week high of $303.82. In discussing his earnings trading strategies, Cramer noted the company is having its “last bad quarter,” which should put earnings-minded investors into a buying state of mind.

Danaher just released its Q2 earnings numbers, with net sales of $7.16 billion which was a 7.7% decline on a year-to-year basis. Management attributed the decline to a downward slide in COVID-related product sales.

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“Danaher – which now has up to three not-so-hot quarters in a row – is now indicating things may be getting better,” Cramer said. “They’re heavily reliant on biotech and China, but that’s why I smell a bottom. We’re restricted, but if we could, we’d buy DHR right now because this last quarter truly marks the bottom.”

Since Danaher finally admitted it’s seeing the bottom, which is something CEOs hate to admit, it’s time to pay attention, Cramer said.

“This is the third cut for Danaher and they’re finally saying this is the bottom, as are other biotech firms,” Cramer concluded. “To me, the magnitude of these cuts in earnings points to a reset for DHR.

As of July 26, Danaher shares are up $4.35, to $260 per share in mid-morning trading.

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