CNBC’s Jim Cramer offered a list of cheap retail stocks that investors should have on their radar on Wednesday.
“There is an oversupply in the traditional retailers and the big chains are desperate to get rid of this stuff so they can bring in a new product,” said the host of “Mad Money.” “The off-price chains are the buyers of last resort.”
Here’s his list of companies investors should be looking at:
- Burlington Stores
- Ross stores
- Ollie’s bargain outlet
Retail giants have reported gains this week, with some outperforming others.
Walmart beat earnings and sales in its second quarter results reported Tuesday. But the company reiterated its profit warning from last month, and CEO Doug McMillon warned in an interview on “Squawk on the Street” on Tuesday that even wealthy consumers are becoming more frugal because of inflation.
Target reported a larger-than-expected loss of profit in its last quarter on Wednesday, seeing profits fall nearly 90% from the same period the year before. The company warned in June that its plans to get rid of excess inventory would be a headwind to earnings.
Cramer said Target’s dismal results reflect consumers’ shift towards experiences rather than goods, largely stemming from a desire to get outside after staying indoors during the height of the pandemic.
While this change in consumer spending means there is a window to buy low-cost retailers, investors need to understand that these stocks are long-term opportunities, he added.
“It doesn’t mean they’re doing so well now,” he said.