Mad Money with Jim Cramer

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Cramer: The Next Breakout Sector

Banks historically have been the best-performing stocks after a financial crisis. That’s right, even though the Western financial system teetered on the brink of collapse, Cramer still recommends buying these companies. But not all of them. In his newest book – Getting Back to Even – he’s largely focused on just the strong, regional outfits in position to take share from their weaker rivals.

Why the regionals? Because this is exactly the group that did so well coming out of the savings-and-loan crisis of the late 1980s and early ‘90s. As bank after bank went under, the Federal Deposit Insurance Corp. sold their assets to more stable institutions, and did so for a pittance, Cramer says. This allowed the survivors to transform from virtual unknowns into major industry players, making their shareholders tons of money in the process.

The credit crisis of 2007-2009 has given investors a twice-in-a-lifetime opportunity to generate some serious profits with the same strategy. Luckily for you, Cramer did a bit of preliminary research to find what he thinks will be the top regional banks to benefit most from the trend. His prediction? All five could double within the next three years.

Of course, the onus is on you to follow up with your own homework and decide if these stocks are right for your portfolio. But they certainly are a great jumping-off point.

Click ahead to find out which of Cramer’s favorites made the cut. (Note: These are in no particular order.)

Posted 25 Oct 2009