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Quick Take: Jim Cramer's Top Homebuilder Stocks

NEW YORK ( TheStreet) -- TheStreet's Jim Cramer and Debra Borchardt discussed some of the stocks investors can buy to take advantage of the strong housing recovery.

"New home sales numbers came out and, boy, were they good," Borchardt said. Cramer's explanation was simple: there's a "housing shortage." It helps that the median home price this month was $271,000, the highest level since 1993, Borchardt added.

Cramer noted that the housing market continues to move in cycles, where the market tends to move up when there is a shortage in housing and down when homebuilders meet demand with an increase in supply.

So how does an investor play housing? According to Cramer, we're only in the second inning of the rally and there's plenty of room to go. He noted several companies that should benefit from an increase in homeownership, including Toll Brothers (TOL - Get Report), Home Depot (HD - Get Report) and Sherwin Williams (SHW - Get Report).

"Don't out-think this," Cramer said, adding Masco (MAS - Get Report) and Whirlpool (WHR - Get Report) to the mix of names that will benefit from a continued housing recovery. None of these companies are part of his charitable trust, Action Alerts PLUS .

--Written by Bret Kenwell in New York.
Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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HD $116.32 0.00%
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