Jim:     We've been talking about irony - irony thesis - that, even as banks will choke to death on bad mortgages, unless we pass the bailout plan - the stocks of the homebuilders, the very heart of the mess, have been on a roll.  Oh, a little pullback here, but so what...  I have said before, and I'll say it again, I believe that housing prices will bottom in 281 days (i.e., June 30th, 2009)... not at this level... it's going to go lower...  something that the Housing Sector Index (^HGX) has been forecasting... the key reason, by the way, that I think the government and, therefore, the taxpayer, will make money on this bailout, as long as the prices we pay for distressed mortgages and blighted assets are right... don't overpay for California, and maybe you pay a little more for, you know, Colorado...

So, other than not selling your house, how do you play the irony thesis?...

With paint... and with fixtures, and with appliances...

Instead of the homebuilders, which have already had a gigantic run, I think we should look at what's known as the early cycle... at the companies that benefit from new home sales, once they turn around...   You have to usually buy these stocks one year in advance, okay... 

And I'm talking about companies like Masco Corporation (MAS), which makes kitchen and bath cabinetry, plumbing, and other home-building necessities.  It's got the Behr paint... you go to Home Depot (HD), and it's like all you can get there...

Masco Corporation (MAS) is best of breed in this business.  It always has been, since the days I recommended it in the 1980s, because of Robert Mitchell and Bob Danforth, two great investors at Goldman Sachs, who always told me that this company is the best one to own for housing.  It still is...

MAS will be in the sweet spot when house price depreciation stops, and house price appreciation is about to begin... or, at least... it doesn't go down anymore.  The worst markets in Florida and California are still bottoming... 10% below here... they might be investable.  The best in New York is finally starting to go down.  That's how you get it.  You get that rolling thing, where the worst is going to bottom, and the best is finally coming down.

The nationwide bottom will come when foreclosures get cut back by the bailout plan, and the new homes are being built at a vastly-reduced rate.

MAS is right in the sweet spot here...  37% of its sales from new homes...  40% from remodeling, and only 20% from outside the country.  A perfect play on the housing bottom, because it hasn't moved...  and more in a second why I like it... because it has a dividend.

Okay, it's barely moved up at all actually and it got killed today.

MAS is at $17.43.  A lower housing start in 2008 and 2009, I believe, are now priced into the stock.  I think housing starts should move up from, say, 600,000-800,000 to 800,000 next year... maybe a million in 2010, because that's what a recovery looks like.

No one is forecasting this...  I'm out there, but no one was forecasting this depression, except for me last year...

Many of these homes are going to have Masco fixtures in them, or use paint...

Cramer, I can hear you ask plaintively...  If this bottom is 281 days away, why on earth are you telling us to buy this stock now?...  Can't we just wait a while?...

But I say why wait when MAS is paying a dividend that would make Sir-Mix-A-Lot drool?...

MAS... a 4.9% yield, and it's safe.  Just for the income alone, it's hard to find a better yield than that...

I'm not lying to you about MAS.  The stock has just gotten clubbed...  It had come back after being hit with a downgrade from UBS.   They gave it a real beatdown today... and it's dividend is plenty secure...

Now they're not going to earn it this year...  I tend not to like this situation but, early cycle, you've got to have a leap of faith...

They may not even earn it in 2009, but MAS's got big cash flow.  It's operating cash flow runs about 3x higher than reported earnings...  so they'll be able to pay it out of that without a problem.  This is my own book work.  Normally, I say look at the earnings, and they pay it out of the earnings, but this is a cash flow story.

In fact, they boosted their dividend earlier this month... that's one of the reasons it attracted me to it.  That's the 50th straight year MAS has hiked its dividend, and very few companies have that kind of record.

You could just reinvest that dividend over and over.  The compound interest would be enormous.

In a market like this, where the world's turned upside down, and there is insanity everywhere... there's something to be said about owning a cabinet maker that pays a big, fat dividend... especially when that company has been reducing its debt in recent quarters, as MAS has, and buying back stock.

Not only that... even though the housing market stinks, on the last conference call, MAS's management talked about keeping R&D spending high during the current downturn, and about maintaining or gaining share with new product offerings.  That spending is going to pay off when the housing market turns around.

They have always been share takers in downturns... always.  That's how they became a great company.  This time will be no different.

This is the kind of company you buy in the teeth of a recession of housing, and we are there.  It's another reason why I like this so much.

MAS has 33 million shares left in its buyback, equivalent to 9% of its shares outstanding.  This is the kind of stock you have to buy now, when the bears are in charge. 

Only 8 "holds" 2 "sells" and only 1 "buy" for this great company... One of the reasons is because the stock looks expensive.  It's at 22.8x earnings.  So you say, well wait a second, Jim.  That is so high.  But, you know, you have to buy early-cycle stocks like this one, just when they seem their most expensive.   I explain this endlessly...  The most-talked about chapter in Real Money, which is my first real book about how the market works, was about the notion that you have to overpay for early-cyclical stocks... and pay high multiples.  I know it's a hard concept, but I've tried many ways to explain it to you.

We are betting on an earnings turnaround, which would take the multiple lower when housing bottoms.  I know that sounds complicated, but it's how investing works.

The bottom line...

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The Bottom Line!:     Do you want to play the irony thesis?...  The bottom in housing prices?...  Well, how about a cabinet maker?  How about a painter?  Look, we will see the housing bottom in June.  The stock to own is Masco Corporation (MAS)...  Not like the homebuilders... they've all moved up.  This one's perfect, because it's paying you 4.9% while you wait.