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Cramer: Two Favorite Themes for 2013

Monday, 7 Jan 2013 | 6:00 PM ET
Connecting the Dots of the Market
Mad Money host Jim Cramer explains why it's important to find market themes that will withstand the test of circumstances surrounding the markets. "Themes are the quintessential non-risk on risk off investment that you can fall back on when the market sells off," he says.

If you're a long term investor, Cramer has some new ideas for you.

If you're nimble, there's plenty of money to be made trading in and out of market moves. Many pros dodge in and out of so-called risk-on and risk-off trades with aplomb.

For them it's the bread and butter of their success.

However, if you're an individual investor, you probably have neither the time nor the inclination to game the market like that. And as far as Jim Cramer is concerned – that's for the best.

Instead, the Mad Money host advocates individual investors focus on themes – ideas that you believe will dominate sentiment and trends for a period of time. If correct, the stocks of companies that benefit from those themes should go higher.

Following are Cramer's new themes for 2013.

Theme 1. The return of banking as an investible place to put money.

"For five years now we have seen the entire banking sector under pressure in one form or another, either because they have had to fight to survive, or flood the market with new capital, or deal with the legacy of so many bad loans or fight the Federal Reserve which has created rates so low that it's difficult for them to make money versus the deposits you provide them," said Cramer.

However, he noted that at the end of 2012 early signs started to emerge suggesting fortunes had started to take a turn for the better in this sector.

Although Cramer sees a number of catalysts among the most powerful, he said, were signs that that construction and small business lending were coming back.

And if that trend triggers loan growth, Cramer believes interest rates could inch higher – "that would be terrific for bank stocks."

"I believe banks are to generate the biggest earnings upside surprises of 2013," he said.

And of all the banks, Cramer is particularly enthusiastic about regionals.

"I expect gains in First Horizon the well-run Tennessee regional as well as BB&T, which could be a southeastern powerhouse in 2013," said Cramer.

However, if Cramer were to bet on this theme with only one stock –he would play KeyCorp.

"I think it's the most undervalued regional and should benefit from a resurgence in the heartland."

Theme 2. The return of the automobile stocks as an opportunity to make money.

Cramer thinks recent data tells you everything you need to know about this sector.

"We have had a remarkable renaissance in domestic car sales, going from about 9 million a year in the depth of the Great Recession to more than 15 million last year and I think that number's poised to go higher," he said.

"But not only is the United States strong, China and Latin America are coming back and Europe is stabilizing," he said.

As a result, Cramer expects to see substantial upside revisions to earnings.

Also Cramer thinks the domestic auto makers are in much better shape now – than at any other time in recent memory.

"Both Ford and General Motors have worked wonders in fixing their balance sheets. Ford refinanced a huge chunk of debt just last week and, of course, General Motors just bought back a chunk of U.S. government-owned stock with cash on hand," he said.

All told, he thinks the path of least resistance is higher.

"Both companies are robust and remain inexpensive historically. This could be the year that Ford and General Motors return to their 2011 highs. I want to be in both," he said.


Call Cramer: 1-800-743-CNBC


Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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KRE
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SPDR FIN SEL
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FHN
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BBT
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KEY
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F
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GM
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