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Jan.24

7:42 PM ET

Thursday, 24 Jan 2008

A Perfect Storm for Profits?

There seems to be a “coalescence” of good news for the market, Cramer told viewers Thursday. So if you’re selling stocks right now, you’re probably being too cynical.

The stimulus package Washington laid out today is clearly good for retail, he said. Guess [GES Loading... () ], J Crew [JCG Loading... () ], Lowe's [LOW Loading... () ], Liz Claiborne [LIZ Loading... () ] and Jones Apparel [JNY Loading... () ] are worth a look on weakness. He likes Costco [COST Loading... () ], TJX [TJX Loading... () ] and Urban Outfitters [URBN Loading... () ], too. Even the restaurants are good with the rebates Americans will get. Darden’s [DRI Loading... () ] his pick for the sector.

And the increase in the loan cap for Fannie Mae [FNM Loading... () ] and Freddie Mac [FRE Loading... () ] should help the homebuilders, especially Toll Brothers [TOL Loading... () ]. Dealing mainly in higher-end homes, the rule change now will funnel money that the company otherwise would have missed to Toll. “This must sell has now become a buy on any pullback,” Cramer said.

The most direct play off the loan-cap increase is Thornburg Mortgage [TMA Loading... () ], though, Cramer said. He likes the preferred stock.

The talk of a bond-insurer bailout is in the air as well. (Read about Wilbur Ross's possible bid for Ambac [ABK Loading... () ].) Cramer doesn’t think it will happen, but with speculation pushing the stocks up, there’s now time for a white knight to come in and save the day. This has made the banks and brokers a buy, he said. Just look at how Bank of America [BAC Loading... () ] raised $12 billion through two preferred-stock offerings.

Click for the rest of Thursday's show

And there’s a chance we’ll see takeovers. Cramer said Bear Stearns [BSC Loading... () ] down $90 is too attractive to UBS [UBS Loading... () ], Credit Suisse [CS Loading... () ] or Deutsche Bank [DB Loading... () ] to pass up. His prediction: Bear will be bought at a hefty premium – as much as 40 points maybe – as part of the consolidation the financials need right now.

If you don’t own any financials yet, Cramer thinks you’ll get your chance to buy all but Bear on a coming pullback. There’s a possibility there will be lots of talk about how the Fed is done cutting, and that means stocks could drop again.

The bottom line, though: Cramer recommended using any weakness to buy retail and financials. “It’s just too virtuous out there,” he said.

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