Stop Trading!: Stocks for the Housing Bottom
The housing bottom is coming by the end of June, Cramer said again during Tuesday’s Stop Trading!, pointing to declining mortgage rates and price reductions in New York, a real estate stronghold. This means certain stocks related to the sector can now be bought.
“If mortgage rates go to 4%,” Cramer said, “are we really going to sit on the sidelines and own Treasurys?”
Cheaper money for homes should attract buyers and the seeming capitulation of the most resilient markets is signaling a recovery in the very sector that so damaged Wall Street, starting about 18 months ago. Believers in this thesis, Cramer said, can buy early cycle plays such as Home Depot and Lowe’s. Even the homebuilders are worth a look, though he’s not especially bullish on these names just yet.
Cramer also urged investors to take advantage of “historic, generational values” in corporate and municipal bonds, saying they make for better investments than mortgage-backed securities right now.
Lastly, stimulus plans both here in the U.S. and abroad in China make infrastructure companies buyable. Caterpillar and Joy Global are Cramer favorites.
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