Shrewd investors identify themes as they put money to work. And if Jim Cramer is anything, he's a shrewd investor.
By themes Cramer means ideas that you believe will dominate sentiment and trends for a period of time. If correct, the stocks of companies that benefit from those themes should go higher.
"Those are the stocks that don't stay down for long – those are the stocks that tend to bounce back," said Cramer.
And a theme that Cramer thinks could drive gains for some time to come is the renaissance in housing.
"I think 2013 will be a year in which the building and furnishing of new and existing homes will drive gigantic returns throughout the stock market," he said.
"We had been building homes at a rate of about 1.5 million a year during the heyday. Okay maybe that's not sustainable. But we dropped to 400,000 a couple of years ago, back to levels of the 1950s, when we had half as many people in this country. Talk about unsustainable. That's ridiculous," he said.
In addition, Cramer thinks other problems vexing the sector have been resolved.
"A combination of banks working with underwater borrowers, a pro-homeowner Washington, and settlements with Fannie Mae and Freddie Mac over bad loans have all helped to restore health to the sector."
If you're agree with Cramer and want to put money to work behind this theme – you may be overwhelmed by the wide range of investment opportunities. Because owning a home is central to the American dream – strength in the sector ripples across a fairly large number of companies.
"First, and most obvious, are the homebuilders. We saw fabulous runs in the whole group, but especially in Pulte, Standard Pacific, Lennar, Toll, as well as Horton and Hovnanian," said Cramer. "I know all of these stocks have had magnificent runs, but I don't think they are over."
Because these stocks have already made sharp gains, Cramer suggested waiting for a pull back before making a move.
But when the pullback comes, he said, "I think you go for Toll. Toll used this downturn to get terrific land, to rein in costs and to extend its reach beyond where it traded during the heyday. It's the best of breed and you know how I feel about the best of breed."
You can also play the theme with housing-related retailers.
"That's everything from Home Depot and Lowes to Pier 1 and Williams Sonoma," he said. If you have a limited amount of capital to put to work, "go with the multi-year turn in Pier 1, as its on-line strategy's just kicking in," said Cramer.
In addition there are building suppliers. This is a group Cramer thinks is particularly well poised because of the construction he expects to see in the wake of Super Storm Sandy.
"In this group, there's plenty to choose from, Owens Corning for insulation, Whirlpool for appliances, Masco and Fortune Brands Home and Security for kitchen and bath, Newell-Rubbermaid and Stanley Black & Decker for fixing up the place, and Mohawk for carpet," said Cramer.
"You could also consider cable companies, or look at Vulcan Materials as a play on new roads, or Berkshire Hathaway, which is a huge housing play along with a terrific insurance business and one of the nation's largest railroads.
Wait – there's more. You can also bet on the trend with the lumber providers.
"That means Louisiana Pacific, Plum Creek Timber, and best of all Weyerhaeuser, which also has a homebuilding division," said Cramer. But again, the Mad Money host said these stocks have run – and he's strictly a buyer on a pullback.
Read More: Cramer: Two Favorite Themes for 2013
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