GO
Loading...

This Is a Consumer-Driven Market

Wednesday, 11 Jan 2012 | 7:58 PM ET
Cramer: 'Know Your Customer'
Mad Money host Jim Cramer explains to investors how knowing the customers of the stocks they own can be very lucrative.

“We are in a customer-driven market,” Cramer said Wednesday. “Find out which customers are spending and you’ve got stock winners.”

Consider the home and housing-related stocks, Cramer said, which have easily been the best performing group yet this year. On this earning conference call Wednesday, homebuilder Lennar reported a 20 percent increase in orders. In turn, Lennar has to buy everything that goes into a house, like copper mined by Freeport-McMoRan , lumber harvested by Weyerhaeuser or kitchen cabinets made by Masco .

“Perhaps the pent-up demand for homes is finally surfacing-easy to believe considering that we're building homes at rate that's lower than when we had half as many people living in this country and we're not even building enough new ones to offset the natural home attrition which happens every year from fire, flood and other disasters,” Cramer said. “Sure, there's a big shadow inventory of existing homes, but how much does that really matter when a new house comes cheaper and costs less to maintain than a two or three or four bedroom rental.”

Housing is just of many areas where consumers are spending, Cramer said. The automakers are seeing an uptick, too. So if investors can determine where customers are buying, they may also be able to pick winning stocks.

  Price   Change %Change
FCX
---
LEN
---
MAS
---

When this story was published, Cramer’s charitable trust owned Freeport.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
FCX
---
LEN
---
MAS
---
WY
---

Featured

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.