Cramer: What Home Depot Says About America, Stocks

Home Depot reported a "total blowout number" Tuesday morning, but the company's conference call said just as much about America as it did about its earnings, "Mad Money" host Jim Cramer said.

"In Home Depot's facts, figures and analysis we trust," he said. "And those point to the beginning of a housing boom in a business that punches way above its weight in the U.S. economy."

First, Home Depot posted a 4.8 percent comparable store growth figure, meaning the stores in this country did much better than last year. However, most notable is where the growth is coming from: California, Florida, Arizona, and Las Vegas.

Second, the professional customer is now outpacing the growth rate of the consumer segment, which Cramer said shows that the next leg of the housing recovery is about to begin.

Carol Tome
Erik S. Lesser | Bloomberg | Getty Images
Carol Tome

Third, tight credit availability means there is still plenty of pent up demand out there, he said. People are still cautious with credit now, but once housing prices rebound people will likely spend more.

Playing Home Depot's Earnings

Other than being a read on the housing recovery, the retailer's conference call was also a treasure trove of investment ideas.

Management stressed that big ticket items, like appliances, were selling extremely well. Cramer suggests buying Whirlpool on any pullback.

Kitchens, pluming décor, electrical, and tools were all said to be outperforming the average comparable store gain. That's why Cramer likes Fortune Brands and Masco, the makers of Moen and Delta faucets, and Stanley Black & Decker. For plywood and gypsum plays, he said don't give up on Louisiana Pacific or USG, even after their runs.

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There were also multiple nods to the strength of lumber and millwork during the Home Depot conference call. For that, Cramer likes Lumber Liquidators, which he suggests buying during one of its "periodic swoons."

And, of course, don't forget Home Depot, which bought $2.1 billion of its own stock this quarter.

"It's reasonable to be a buyer of Home Depot yourself," Cramer said, "especially if we get some sort of downdraft based on Japanese inflation, or European deflation, or Chinese reflation, or any of the other 'ations' that everybody's always worried about."

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