Get ready for a housing rebound
The move in this group of stocks reveals the truth: Residential real estate has hit bottom and is on its way higher.
It's not a question of when the housing recovery will occur but of how big it will be. That's how I have felt watching the stock market action since the year began.
I use a couple of classic tells to forecast housing sales and values, and they are flashing bright green, really defying gravity in their obvious way of saying, "Housing's back in 2011." This despite the universal "Housing's the same mess it has always been" rap, as well as the downbeat projections, mostly from the noisy folks at Zillow, many of which do not reflect the hard macro data kept by other entities.
Look at these breakouts we have seen just this year: Whirlpool (WHR), Lowe's (LOW), Sherwin Williams (SHW),Pier 1 (PIR), Ethan Allen (ETH), Masco (MAS), Stanley Black & Decker (SWK) and even Williams-Sonoma (WSM) after that disappointing outlook. That's incredible. These stocks are screaming that sales for homes are going higher and that the value of homes is going higher, or people wouldn't be throwing good money after bad.
I really want to call people's attention to this Ethan Allen run, especially because short sellers are in disbelief about it. You don't go shopping at ETH unless you think your home is worth spending money on. The stuff is too expensive, much of it now custom, and the sales are amazingly strong. That's good for the $300,000 home cohort.
For the $200,000 home cohort, I look at Pier 1, and its sales are the best they have been since the housing boom -- before the bust -- began. Maybe better. Williams-Sonoma's run is harder to pin down, as it is a Tiffany (TIF) kind of place. However, its catalogs are a little more downscale. I say the strength reflects good news for all except the lowest-price homeowners and buyers.
Post continues after video:
Whirlpool has been trying to break out forever, but the housing start numbers have killed it. The WHR move says that housing starts are going to get stronger. I have mixed emotions about that, because I don't want a lot of new inventory. But you have to think that at some point these homebuilders will want to put up new homes to make money and not just to fulfill credit agreements or, wrongly, try to capitalize on the tax credit stimulus.
Big moves. Don't ignore them. They are screaming that housing has bottomed and is now going HIGHER!
Random musings: I did not mean to slight Weyerhaeuser (WY) by leaving it out, as lumber does matter, but there's been a spike in all commodities, and I do not believe that WY has yet felt any real boost from U.S. housing.
At the time of publication, Cramer was long Stanley Black & Decker and Weyerhaeuser.
Follow Cramer's trades for his Charitable Trust.
I usually don't waste my time posting on PR related stories, but this one deserves the entire cake!
Cramer, you have dumbfounded me!!!! Based on a few stocks you predict a rebound of housing starts!!!!!!!!!!!! WOW, that deserves comment!!!! First thing, For housing starts to rebound, there needs to be a competitive market for all types of housing! second, housing cannot rebound until the economy rebounds!!! third, the economy cannot rebound until prices of food, utilities and tangibles decreases! fourth, unemployment needs to split half of the 10 percent it will reach this year in order for any of this to change! fifth, ARE YOU SMOKING CRACK? I mean are your article ratings that low that you would completely disregard all of the external indicators? You look at a couple of DOG stocks and predict a housing start rebound? No wonder you write for MSN!!!
Man could you be even farther off.
Have you forgotten about the entire shadow inventory the banks have on their books?
Have you thought about all of the foreclosures still in the works and still to come?
Foreclosures haven’t even slowed down yet, in 4th quarter 2010 there were more foreclosure filings then ever before. Also add to the fact that the banks lost so many mortgage notes and now are being forced in the courts to prove ownership if mortgages. It will take at least another 2 years to work through the mess the banks have made.
With $11M homes still "under water" in this country I fail to see a housing recovery anytime soon......and mortgage rates, although low, have been rising..... the math does not work for a recovery soon.
Until "the little man" has enough work to sustain a motgage, Cramer is incorrect. In housing it starts at the bottom and works it way up. The Ethan Allen Crowd, and of course Williams sonoma are the ones who made money on the last Debacle, means they have money to fiddle around with while rome still burns. Should change his name to Nero perhaps.
Anyone want to buy my home before foreclosure, wait a few more months and you can pick it up at foreclosure. Just because it finally sold doesnt mean squat. Nope hes wrong this time.
Buy low sell high. Thats always what the experts say.
So why do people not want to buy the homebuilder stocks when they are near their lows? The housing market has already hit rock bottom. Right now is the time to be buying and selling the home builder stocks to make profits. These stocks fluctuate up and down a lot and constantly. Holding onto a stock expecting it to increase enough to help you become a millionaire is just foolish. The only way to get rich off the market is increase the number of shares you have.
Housing market may not be on the rebound but home builder stocks sure are. Not saying this means much but sure has helped my IRA! Way to go BZH!
Hogwash! I'll make 2 points the disprove your misplaced optimism. 1. The companies quoted are international like the rest of the market and doing well from overseas investments. We don't make anything in this country. We consume. Profits are generated from overseas selling to us. The workers producing don't pay social security, they don't pay taxes period. Major loss of government revenue and money spent to stimulate the econonmy. Profits are reinvested overseas not here. So no job growth for us and not enough income for us to buy homes, period, at these prices. 2. Anyone that studied the chart posted right here on MSN money knows the bad loans due for interest resets doesn't peak until 2012. It won't be until 2013 the housing market can really start to recover. That's when the foreclosures will take a dive, the surplus of homes will start to decrease. The homes sold now are investors or people moving from existing to existing homes. Don't be deceived. The housing rebound ain't happening yet!
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Shares of DVR pioneer TiVo are up 40% over the past 2 years, but unlike with the industry giants, there's still plenty of room to run with this pay-TV play.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.