Jim Cramer's Stop Trading! KB and the Sunshine Band

Stock quotes in this article: KBH , AA  

A solid quarter at KB Home (KBH Quote) shows how bearish coverage of the homebuilding sector has spun out of control, Jim Cramer said Tuesday on CNBC's "Stop Trading!" segment.

Cramer noted that the average price of a house sold by KB rose 4% from a year ago in the latest quarter and that revenue rose over all as well. Cramer said these underlying fundamentals show that the Los Angeles-based homebuilder is ripe for a takeover.

But people "are so busy burying this company," Cramer lamented, that the strength of KB's position is being ignored, Tuesday's 4% rise in the stock notwithstanding.

Cramer said chatter of a bid for Alcoa (AA Quote) makes sense because the last year or two has shown that "undermanaged companies" in the metals sector have gotten takeout deals. Cramer said he expects Rio Tinto (RTP Quote) to buy the Pittsburgh-based aluminum smelter, whose shares were up 6% Tuesday.

Cramer also lamented a $7 billion buyback plan at 3M (MMM Quote), saying management should "fix the company first."

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At the time of publication, Cramer had no positions in stocks mentioned.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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