Cramer says investors should stick with 'best of breed' retail stocks

view original post

There's a 'gigantic tug-of-war' happening behind the scenes with retailers and suppliers: Jim Cramer

CNBC’s Jim Cramer on Monday said in the face of traditional retail’s “unrelenting crunch,” investors should look into retailers that are able to perform well in the face of continued inflation.

“I wish I could tell you to buy the beaten down retailers, but the one thing I know is that buying best of breed is the way to go, and at this stage in the retail world, there are only three best of breed general merchants, and they are Walmart, Costco and Amazon,” Cramer said.

To Cramer, retailers and suppliers are in a fight about who eats the cost of inflation. He said giants like Walmart and Costco are better prepared than other companies to win those fights because of their size and the fact that many suppliers can’t do business in the U.S. without being on those stores’ shelves.

“What makes Walmart and Costco so special is that, if they don’t like the prices they’re quoted, they can just go and make their own store brands and put them side by side,” Cramer said.

He added that at Walmart, sometimes the generic offering is right next to the branded offering, with seemingly little difference between the two except that one has a lower price.

Price pressure and convenience are driving consumers to Amazon, especially its Prime service, Cramer added. Amazon’s speedy product delivery has also changed consumers’ shopping habits. Consumers might be less likely to visit a Walgreens or a CVS because they can get the same products delivered same-day to their door through Amazon, often at cheaper prices, he said.

Jim Cramer’s Guide to Investing

Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.