Jim Cramer's Stop Trading! Buy Countrywide

Jim Cramer would still be buying Countrywide (CFC Quote) 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 Quote) and New Century (NEW Quote) 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 Quote), Bank of America (BAC Quote) and Citi (C Quote), "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 Quote) 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.