Jim Cramer's Bargain Housing Play

With the housing market "roaring back," most housing stocks have been propelled higher. But Jim Cramer has found one bargain housing play that is down for 2013 – security company ADT.

"You start building lots of new homes, that means you have to install lots of new security systems," Cramer said Monday.

There are two reasons the "Mad Money" host likes this name. First, he thinks the company, which was spun off from Tyco in October, could ultimately be takeover target for a company like Honeywell or United Technologies.

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Cramer also likes the fundamentals.

ADT's earnings met the Street's revenue estimates when it reported last week, but its earnings per share missed estimates by 2 cents. While the stock initially dropped, it's since bounced back—and is now above where it was when it reported.

"Even though the headline earnings numbers have been disappointing, that was in part because the company is spending more money to improve its customer service so they can retain more customers," Cramer said.

Plus, he added, management thinks that the margins can improve over the rest of the year.

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Disclosure: When this story was published, Cramer's charitable trust owned ADT and United Technologies.

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