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  1. Home
  2. / Jim Cramer

Jim Cramer: Let's Talk About the Big Winners in the Housing Market

For housing, lower rates have the biggest multiplier impact of any industry in the country.
By JIM CRAMER Jul 17, 2020 | 11:40 AM EDT
Stocks quotes in this article: MAS, PPG, VMC, MLM, SWK, DE, SMG, POOL, WM, BBY, HD, LOW, LEN, DHI, TOL, BAC, JPM

Jay Powell doesn't get enough credit for what he's doing in this country. He recognizes that lower rates will stimulate housing and holy cow is he ever doing so. We got single family starts that were up 17% year over year to 1.186 million but more important we are running out of inventory. Because of low rates we need 1.5 million homes to meet demand, according to the National Association of Realtors, or NAR. That's truly good news as housing punches above its weight, which at this level looks like only 10% of the economy but is really much more.

Consider what goes into a house: lumber, copper, glass and paint to start. Cabinets, sinks, appliances, wiring, so much. I like Masco (MAS) and PPG Industries (PPG) for those.

And then there are the roads, try Vulcan (VMC) and Martin Marietta Materials (MLM) . Construction means Stanley Black & Decker (SWK) , which keeps beating numbers, raising numbers. Deere's (DE) lawn products, terrific. I like Scott's Miracle-Gro (SMG) as a play on housing as well as the eponymous Pool Corp. (POOL) . The latter is a double winner, because it also figures into the play at home Covid-19 thesis. While it's stock is already up 35%, I think there's room for more because of that 1.5 million demand story that NAR is propounding.

Let's not forget that Waste Management (WM) does incredibly well when there is construction trash. It's their best line of business. The stock's down almost 20 points from its high and, as we told club members of Action Alerts PLUS this may be one of the most reasonable growth companies out there.

But let's talk about the big winners. First is Best Buy (BBY) because we are in an era where you need a television that's big enough to make your den into a theatre. We aren't going to the movies any time soon because of Covid. So we go to Best Buy and get the equipment we need to make our home into a theatre. But then we have my two favorites: Home Depot (HD) and Lowe's (LOW) . Home Depot's been the leader and it is still a fantastic stock even up here. But my favorite is now Lowe's because of the changes that Marvin Ellison is putting through. For years before Ellison came in Lowe's the company underspent on technology. That's no longer the case and I think that the company's on-line business will be the big earnings kicker. Lowe's used to be the leader in the group during the period where Home Depot underspent. The order may be changing.

The most obvious should not be dismissed: Lennar (LEN) , Horton (DHI) , Toll (TOL)  , but I would prefer the components more than the builders if only because they are more consistent because they also serve the existing home buyer.

Right now you hear a ton of stories about how low rates hurt the banks and, indeed, low rates kept Bank of America (BAC) and JP Morgan (JPM) , and lots of other banks from making a lot of money on your deposits. That's a silly worry. When we add up all the people who are involved in the making and selling a house, lower rates have the biggest multiplier impact of any industry in the country.

(Waste Management and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long WM, JPM.

TAGS: Economy | Federal Reserve | Interest Rates | Investing | Markets | Stocks | Trading | Housing Market | Jim Cramer | Coronavirus

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Jim Cramer: America's Toughest Job? Finding Workers

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It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

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Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

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While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

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Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

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