Stocks ended near their best levels Tuesday, recovering from their worst one-day drop in 2013, following comments from Fed Chairman Ben Bernanke and in spite of the uncertainty created by Italy's election.
To Jim Cramer, though, the biggest story of the day was earnings results from Home Depot (HD). The home improvement retailer posted results that topped expectations, causing its stock not only to soar, but lead the Dow gainers. Home Depot also announced it would buy back as much as $17 billion of its own shares and raise its dividend 35 percent to 39 cents from 29 cents a share.
(Read More: Stocks Recover From Worst Drop in 2013)
Cramer said the most important and surprising part of Home Depot's call, though, what they sold: everything from lumber to electrical and outdoor garden to decor, as well as kitchen, bath, plumbing and hardware, among much more.
"I have never heard so many categories be that strong in all the years that I have followed the Despot and that dates back to 1988, when they first came to New York if you're counting," Cramer said, noting CEO Frank Blake credited an improving U.S. housing market for the strong sales. Blake added that the housing recovery is nowhere near complete either.
(Read More: On the Call: Home Depot CEO on Housing Market)
In turn, Cramer thinks investors should consider the "best of breed" stocks in each of the housing-related categories where Home Depot is seeing strength. Following is a list of names mentioned on the show.
Lumber: Weyerhaeuser (WY), a lumber company that doubles as a homebuilder.
Electrical: Eaton (ETN), which recently closed on the Cooper Industries (:CBE) deal.
Garden: Scotts Miracle-Gro (SMG), however, Cramer has this stock in the "penalty box" because the underlying company has reported a few missed quarters.
Flooring: Lumber Liquidators (LL)' stock jumped Tuesday, but is still down 10 percent from its high.
- Reuters and CNBC.com contributed to this report
More From CNBC
- Lightning Round: HomeStreet, McDonald's, Alcoa and More
- What'll Bring Me Back to Stocks: Dennis Gartman
- What Gets the Market to Rally: Mike Murphy
- Home & Garden
- Home Depot
- Jim Cramer