Cramer questioned what would happen to TOL if rates increased, such as 10-year Treasury yields reaching 3.5% and 30-year mortgage rates hitting 5.5%. He added that rising rates is both good and bad. On one hand, it's a signal that the economy is recovering; at the same time, it is hindering growth potential.
Specifically, he said TOL is "thoughtful" about where mortgage rates are likely headed, and should be able to distinguish whether investors need to worry about it.
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Cramer complimented the work by TOL's economists and suggested they will provide investors with more insight than just the outlook of their company, such as on the overall economy or industry.
Despite how higher rates may affect the housing market, Cramer is still optimistic on the overall trend. However, he concluded that when rates stop going higher, he prefers to be in names such as Home Depot (HD)HD and Whirlpool (WHR)WHR.
-- Written by Bret Kenwell in Petoskey, Mich.