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Jim Cramer's Stop Trading! Buy Countrywide

TheStreet.com Staff

Jim Cramer would still be buying Countrywide (CFC) even as the subprime lending business goes sour, he said Thursday on CNBC's "Stop Trading!" segment.

Cramer said the warnings late Wednesday from HSBC (HBC) and New Century (NEW) are "just the beginning" of the shakeout of lower-quality names in the low-end mortgage business.

"Some of these companies had bad models," Cramer said. "HSBC wanted in so bad, they lowered their standards" in buying lenders such as Household International.

By contrast, Cramer said, Countrywide and some of the other big lenders, such as Wells Fargo (WFC), Bank of America (BAC) and Citi (C), "have models that show they aren't going to blow up," Cramer said.

Cramer said he would buy Countrywide before Wells because it's cheaper. He also said signs of stress in the subprime lending arena raise the prospects of a Fed rate cut sooner rather than later -- a move that would be hugely bullish for most stocks.

Cramer also would buy J.C. Penney (JCP) ahead of a big media blitz tied to the all-important Valentine's Day next week. He said the retailer is the best-positioned department store right now.