Given recent data and a strong earnings report this week from homebuilder Lennar , Cramer thinks the U.S. housing market has bottomed and is poised to rebound.
To play the potential housing turn around, though, he doesn’t recommend buying homebuilder stocks because they have already had a huge run. Instead, he’s attracted to home improvement plays that pay you to wait for the rebound to kick into full gear.
Cramer especially likes Stanley Black & Decker . The New Britain, Conn.-based company is the largest maker of hand tools, power tools and related accessories in the United States. The company enjoys a 40 percent market share in tools, making it the “undisputed king of the market,” he said.
While Stanley Black & Decker is profiting from a surge in spending at home improvement retailers Lowe’s and Home Depot , each of which account for more than 10 percent of Stanley’s sales, SWK is actually down 1 percent in the last six months. Cramer thinks that’s nuts and certainly won’t last for long. Its stock is cheap, selling for 12 times forward earnings estimates with an 18 percent long-term growth rate. It also pays a 2.2 percent dividend yield, leading Cramer to call it a “raging buy.”
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