There are signs of a turn in California, Cramer told Mad Money viewers on Monday. What was once one of the hardest hits states during the downturn seems to be clawing its way back from the bottom.

This is the state that had one of the worst housing markets in the US after the industry’s collapse. And it’s still sitting on 12.5% unemployment – far above the national average of 9.7% – and a $20 billion budget deficit. But look at what’s happening now:

The population is growing after declines in Southern California. The Los Angeles Times said that the major ports of LA and Long Beach are starting to bustle. And the Case-Shiller data showed a 0.3% increase in home prices from December to January in the top 20 markets, with Los Angeles at the top and San Diego and San Francisco also on the list. Plus, the demand for California’s debt shows that investors must not think the state’s credit risk is as bad as it seems.

This all adds up to a resurgent Golden State, Cramer said, and he thinks you should play it. Given that California is the world’s eighth-largest economy and it represents 13% of the America’s gross domestic product, there should be plenty of opportunities. So many, in fact, that he said he’d focus on a different sector every night this week to give viewers a jumping-off point.

Monday went to retail. Cramer based that call on a recent Los Angeles Times article that talked about retail shopping center vacancies peaking in the third quarter of 2010 and improving in 2011. Investors want to get in ahead of that, as it will almost surely accompany an increase in consumer spending. But what’s the best way?

Look for retailers with 25% or more of their stores in California, Cramer said: Nordstrom , the department store with 29% of its locations there; Ross Stores , the off-price retailer with 26% (and not to mention a great dividend); and then for dollar stores there’s 99 Cents Only with 75%, though Cramer said it’s not as well run as Dollar Tree and Family Dollar .

Still, Cramer’s favorite retail play on California is Costco . Twenty-eight percent of the company’s 599 warehouses are there, and they represent 35% of sales. On its most recent conference call, management said the state had improved over the first quarter, and J.P. Morgan separately found that same-store sales were positive, a marked difference from last year’s decline. Also, membership changes seem to have stabilized, and Sam’s Club has left some markets, leaving them open to COST.

California isn’t Costco’s only revenue stream, though. This company should benefit from a national recovery, as discretionary spending picks up across the board. And there’s even some international exposure here as well. Watch the video for Cramer’s full report on that.

Cramer’s charitable trust owns Cisco Systems.

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