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Feb.01

6:55 PM ET

Friday, 1 Feb 2008

Game Plan: Buy Banks!

Posted By:Carlo Dellaverson

Topics:Banking | Stock Market | Stock Picks

Sectors:Retail | Technology

The move in the most downtrodden sectors of the market – think retail, banks and homebuilders – is so powerful that it’s lifting even the most mediocre stocks in those sectors. That was the basis of Friday’s Game Plan and Cramer used it to predict which stocks in those sectors he thinks will continue the run next week.

Now that interest rates are dramatically lower, money that was in cash is now flowing freely into stocks. That explains why this rally is so broad-based and it’s also why it doesn’t matter right now how poorly some of the actual companies are doing.

Take Wal-Mart, for instance. CEO Lee Scott has been a longstanding member of Cramer’s CEO Hall of Shame. But, in light of the new ethos of the market, even the poorly managed Wal-Mart [WMT Loading... () ] is set to soar, Cramer said.

Agriculture and coal are both ramping, too. As Cramer said on Stop Trading!, railroads like CSX [CSX Loading... () ], Norfolk Southern [NSC Loading... () ], Burlington Northern [BNI Loading... () ] and Union Pacific [UNP Loading... () ] are a great way to get behind increased coal demand.

But nothing beats the banks here, according to Cramer. Once absolutely hated by the Mad Money host, the lowly Capital One [COF Loading... () ] is back in play now that its defaults aren’t rising as much and interest rates are down. Citigroup [C Loading... () ], Merrill Lynch [MER Loading... () ]and Washington Mutual [WM Loading... () ] should all continue their rallies next week too as they are some of the biggest beneficiaries of the plan to bail out the insurance arms of the bond insurers.

CLICK FOR THE REST OF FRIDAY'S SHOW:

But Cramer saved his best trade for last: NYSE Euronext [NYX Loading... () ]. The company is on fire even though the stock just looks flammable. But remember the adage that companies don’t matter right now as much as the strength of the move and NYX fits right in. Cramer would buy it ahead of earnings on Monday if it’s still at the current price.

Trust the playbook and trust the momentum behind the rally. The worst stocks of yesterday are poised to be some of the best of tomorrow – even if the companies aren’t.

Oh, and the Microsoft [MSFT Loading... () ]/Yahoo [YHOO Loading... () ] deal? It’s going to happen, Cramer said. Mr. Softee is a buy under $30.

Jim's charitable trust owns NYSE Euronext and Citigroup.

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