Jim Cramer Trades Home Depot’s Earnings

Home Depot reported quarterly results Tuesday that topped Wall Street's profit estimates and boosted its fiscal-year earnings guidance, prompting Jim Cramer to look for second-derivate trades on the good news.

The company's second quarter, which ended on July 29, is typically the most important selling period for home improvement chains, but unseasonably warm weather early in the year pulled some demand into the first quarter. Luckily, Home Depot [HD 55.25 0.54 (+0.99%) ] said tight cost controls helped it offset sales weakness. In turn, at least two brokerages raised their price targets on the firm. Its stock closed sharply higher. (Read More: Home Depot Earnings Beat Forecasts, Ups Guidance)

To the “Mad Money” host, though, Home Depot’s earnings conference call was a “thing of beauty.” After all, he noted that it basically told investors “what stocks to buy without naming any of the actual companies, simply by letting you know what product is selling.”

After its strong earnings numbers, Cramer remains bullish on the world’s largest home improvement retailer. But here's a list of other stocks that he thinks are a ‘buy’ based off of Home Depot’s earnings.

To start, Cramer looked at housing plays.

“The company’s told you that California and Florida are now stabilizing,” Cramer noted. “That means if you’ve been hanging on to Standard Pacific [SPF 6.13 -0.08 (-1.29%) ] , Pulte [PHM 12.66 -0.04 (-0.31%) ] , Lennar [LEN 31.17 -0.11 (-0.35%) ] , or even KB Home [KBH 10.19 -0.25 (-2.39%) ] , it’s too early to ring the register despite the huge gains.”

In addition, Cramer would look to Mohawk Industries [MHK 72.90 -0.03 (-0.04%) ] to gain exposure to flooring.

Cramer also likes paint maker Sherwin-Williams [SHW 139.22 -1.75 (-1.24%) ] , even despite its flirting with its highs.

Lock maker Fortune Brands Home & Security [FBHS 23.63 0.22 (+0.94%) ] , which also makes kitchen and bath fixtures, is also a ‘buy’ in Cramer’s opinion.

With increased demand for lumber, Cramer suggests Weyerhaeuser [WY 23.6889 -0.0111 (-0.05%) ] .

Appliance maker Whirlpool [WHR 71.79 0.27 (+0.38%) ] is another stock to consider, he said.

Finally, Cramer noted that he thinks Stanley Black & Decker [SWK 66.58 -0.19 (-0.28%) ] is the way to play tools, even though it has a sizable European business.

by cnbc/madmoney.com