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Housing Renaissance Driving Derivative Plays

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"The housing market appears to be roaring back," said Jim Cramer, "and it's taking these stocks with it."

Cramer is talking about mortgage insurers.

"For those of you who don't remember, the mortgage insurance names were some of the most hated stocks out there when housing was imploding, and they stayed hated when housing was flat-lining," Cramer said.

"But now that housing has shown signs of significant improvement, the mortgage insurance stocks are rocketing higher."

And of all the names in the space, Cramer suggested taking a long hard look at Radian. He said there's a lot to like about this one..

"On February 25th, Radian announced a 34 million share secondary offering, which dramatically improved the company's balance sheet. They priced the secondary at $8 on the 27th, and the stock went on to close at $8.45, which tells me just how much demand there is for this one."


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Also Cramer said, Radian is writing profitable new policies. According to his research, by the end of the year, Radian's post 2009 business will represent 75% of their exposure.

On top of that Cramer sees another catalyst.

"The Federal Housing Administration, which is Radian's largest competition with 15.8% of the overall mortgage insurance market, has repeatedly raised prices and flat out said that they plan on reducing their market share back to its old average of 8 to ten percent."

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Read More from Mad Money with Jim Cramer:
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In other words, the FHA is giving business away, Cramer thinks Radian will grab most of it.

All told Cramer likes what he sees. "I think this one has more room to run."

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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