Cramer's 'Mad Money' Recap: Signs of Housing Turnaround (Final)
NEW YORK ( TheStreet) -- "Owning a home could be making comeback," Jim Cramer announced to his "Mad Money" TV show viewers Monday. He said the impact of housing is now palpable in the markets and it's likely to stay that way for years to come.
Cramer explained that while lingering problems in Europe and rising gasoline prices are a still a concern for the markets, consumer spending is what has been driving the markets as of late.
He said consumers are dining out more often, as evidenced by Darden Restaurants (DRI) strong earnings. Cramer said consumers are driving to destinations like Walt Disney (DIS) , as noted by today's Goldman Sachs (GS) upgrade of the company. But most importantly, consumers are spending on their homes.
Cramer said that the home improvement is on fire, propelling Lowes (LOW) to blow away the estimates. Pending home sales for January were also on the rise, as for the first time in five years, spending money on a home might not be a losing proposition.
Playing the recovery in house shouldn't be done via the home builders however, cautioned Cramer, it should be done by all of the ancillary plays, stocks like Lowes and rival Home Depot (HD) , also with Stanley Black & Decker (SWK) , a stock which Cramer owns for his charitable trust, Action Alerts PLUS.
Restructing Post Mortem
When an iconic company announces a major restructuring, investors need to ask "what went wrong," Cramer told viewers, as he examined the plight of the iconic consumer packaged goods company, Procter & Gamble (PG) .
Despite increasing revenues by 5% over the past few years, Procter has been unable to boost earnings per share growth, causing the company to announce a major restructuring effort that will trim over 5,600 jobs and take $1 billion out of the company's marketing efforts. But will these efforts be enough to turn the consumer giant around? Cramer said probably not.
Cramer explained that the Procter of today is no longer the best of breed giant it once was. He said there is no culture of cost-cutting at the company, calling into question whether it can deliver on its promises.
But the real issue for Procter is that of the entire consumer packaged goods sector, which has been in a tailspin as birth rates in the U.S. fall and the group sees increased competition from private label products along with higher commodity prices.