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The Play on Resurgent US Manufacturing

Despite the debt problems wracking Europe right now, and the terrible effects they have had on the US, manufacturing in this country is “stronger than ever,” Cramer said Wednesday. He thinks EastGroup Properties is the best way to play it.

Cramer has been bullish on the US economy for some time, even in the face of potential defaults from Greece, Spain and Portugal, and he found confirmation of his call in this morning’s Wall Street Journal. “Exports Fuel Factories Despite Crisis,” the headline announced. Now the Mad Money host is ready again to trade the news.

The problem, though, is that the markets haven’t exactly reacted positively to similar stories In fact, the Street has downright ignored what Cramer sees as the economy’s positive fundamentals, focusing instead on only the negative. Therefore, if retail investors want to trade a resurgent American manufacturing sector, they’re going to need a tested stock that can weather this environment. They need a company that has stood up to the shorts before.

Enter EastGroup Properties , which Cramer himself shorted in 1990, much to the detriment of his returns that year. EGP, an accidental high-yielder offering 5.6%, owns industrial and office properties in the Southern US, especially in Texas, Florida, California and Arizona. Like Boston Properties and Federal Realty Trust before it, which helped investors to survive the down markets of 2008 and 2009, Cramer thinks EGP will carry its shareholders through this most recent storm, too.

Besides the fact that EastGroup has paid a dividend for 122 consecutive quarters, and it expects to earn enough to keep paying it, management on its latest conference call basically called a bottom in the industrial-property business, “an incredibly bullish sign,” Cramer said. Plus, the markets for industrial space in many of the areas in which EGP operates are looking up. But unlike similar industrial REITs ProLogis and AMB Property , EGP hasn’t yet rallied. Actually, both short sellers and negative analysts – seven “holds,” one “sell” and just three “buys” – have kept this one down.

But as Cramer mentioned, EGP has bested the shorts before. He bet against the stock 20 years ago only to watch his initial gain give way to a sizable loss. He finally covered at $10 a share, though he should have bailed at $5, and today EGP is worth $25 more. Cramer thinks there could be another 20% to go.

In the meantime, investors are getting a very cheap stock. EastGroup has fallen all the way to its net asset value, or the total value of all its current properties, which ranges from between $31 and $36. That’s the buy-in range, too, Cramer said. Just don’t pay more than $36.

One last takeaway: EastGroup has generated enormous returns for its shareholders any time it yielded more than 5%. (Remember, it’s now yielding 5.8%.) Between 1995 and 2005, it met that benchmark and rose 205%, or 535% including reinvested dividends.

“So I am sure I’m probably being too conservative with my forecast of just a 20% gain,” Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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