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Wednesday, June 29, 2022

Jim Cramer says he likes these three smaller plays in battered retail sector

CNBC’s Jim Cramer said Friday that while the retail sector has had a rough week, there are still several winners that stand out against the deluge of stocks that tanked.

“The big four aren’t the only retailers that reported this week, and surprisingly, some of the smaller players actually did pretty well,” the “Mad Money” host said, referring to retail giants Walmart, Home Depot, Target and Lowe’s.

“While retail’s truly awful right now, it’s not uniformly awful. Most stores may be struggling, but you’ve got a few that are doing quite well. And I’m telling you that TJX is definitely a buy, [BJ’s Wholesale] I’m okay on, Foot Locker is alright for a trade,” he later added.

Cramer’s comments come after several retail giants reported their quarterly earnings this week. Target and Walmart both reported disappointing results that saw their stocks fall, while Home Depot and Lowe’s fared better.

“These big-box chains are being eaten alive by inflation and changing consumer preferences — people are no longer spending like we’re in a pandemic, they’re spending like we’re back to normal,” Cramer said, noting that that has led to excess inventory for these retailers.

While that’s bad news for names like Target and Walmart, it’s a tailwind for discount retailers such as BJ’s and TJX, which operates TJ Maxx and Marshalls, Cramer said.

TJX “preys on the weakness of other retailers — it’s like a vulture. For several quarters, they couldn’t get their hands on much merchandise because nobody had excess inventory. … When you see Walmart and Target struggling like this, you know TJX won’t have a problem getting good product,” he said.

As for Foot Locker, Cramer said its better-than-expected quarterly earnings puts it in a more comfortable spot than several of its bigger peers.

“Clearly, these guys do have a better handle on the current retail landscape than most other operators,” he said.

Disclosure: Cramer’s Charitable Trust owns shares of Walmart.

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