Cramer's 'Mad Money' Recap: May 18

Stock quotes in this article: SHW , LOW , SMG , STT , BBT , USB  

Click here for an archive of Jim Cramer's Mad Money recaps.


"You'll never hear anyone say foreclosures are good for the economy, but they are," Jim Cramer told the viewers of his "Mad Money" TV show Monday.

Case in point, the Lowe's (LOW Quote) conference call, which Cramer had been waiting all weekend to hear.

To understand the state of the U.S. economy, he said you must understand the stages of the housing market. First, he said, home prices roar higher and eventually top out.

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Next, there's a period of stagnation, as buyers and sellers can't see eye-to-eye and prices fall. Then comes the turnover phase, where the pace of home sales quicken as the bargain hunters swoop in and stabilize the market. And finally, there's the recovery phase, where prices once again begin to rise.

According to the Lowe's call, we're now in phase three, said Cramer, the turnover phase. The last wave of foreclosures is bringing in the bargain shoppers, as it's now more affordable to buy a home than it is to rent a home.

So what to buy in the turnover phase? According to Lowe's, lawn and garden items and paint are the best ways to fix up and turn over a home. And according to Cramer, that means the stocks to buy are Sherwin Williams (SHW Quote) and Scotts Miracle-Gro (SMG Quote).

Cramer said Sherwin Williams has much more upside, even with the spike in shares today. Scotts Miracle Gro is twice blessed, said Cramer, both taking advantage of the housing cycle and a boom in home gardening. For a long time the trend was "DIFM," or Do-It-For-Me, said Cramer, but now it's back to "DIY," or Do-It-Yourself, and that's why these two companies, along with Lowes are the way to play.

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