Home-Repair Stocks Point to 'Less Bad'

Did Black & Decker (BDK - commentary - Trade Now), Masco (MAS - commentary - Trade Now) and Fortune Brands (FO - commentary - Trade Now) overshoot where they should go? Is Whirlpool (WHR - commentary - Trade Now) too high? Are people overestimating the discretionary income that people have after a Best Buy (BBY - commentary - Trade Now) disappointment? Is Best Buy's appliance figure such a bummer that everything has to come down?

I don't think things are that drastic, but they aren't so hot. Best Buy looked terrible vs. last year. Once again, though, I retreat to the comments by Home Depot (HD - commentary - Trade Now) CEO Frank Blake last week about how Home Depot is simply less bad. So, how does Black & Decker fit into a "less bad" prism? I think that at $40 you had to be betting that things were getting darned good. (In fact, as with Home Depot, Best Buy's "upside" was largely derived from expense control.)

At $29, Black & Decker is all about "less bad." And in the low $20s, where it was, you had a "getting worse" scenario. Fortune Brands is still not reflecting a "less bad" scenario, and Whirpool is reflecting a "good" scenario.

If you are looking for stocks to bet against here, I would bet against Fortune Brands. I don't want to short Whirlpool, because everyone else is.

One could argue that it was outrageous that these stocks got so high, particularly Black & Decker, which soared on takeover talk and a belief that orders have bottomed -- neither of which is the case.

This group is vulnerable. Is that contrary to my housing call? No, not at all. Remember, I am about house price stabilization. These stocks are about house price appreciation. We aren't going to get that any time soon.

Random musings: General Electric (GE - commentary - Trade Now) is under tremendous pressure to go to $12 ... just like Bank of America (BAC - commentary - Trade Now). The pressure on these, you must understand, is tremendous and cannot be bucked, and that means that it will be mighty hard for the market to rally here. ... Good housing debate in Columnist Conversation. I am in agreement with Doug Kass on the housing bottom, but the market needs to work its way lower for now.

At the time of publication, Cramer was long BAC, GE and HD.

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