We recently compiled a list of the Jim Cramer Discussed These 11 Restaurants and Retail Stocks. In this article, we are going to take a look at where Walmart Inc. (NYSE:WMT) stands against the other restaurant and retail stocks Jim Cramer recently talked about.
Jim Cramer, the host of Mad Money, recently took a closer look at the state of the consumer, focusing on restaurants and retailers to understand the broader economic picture. According to Cramer, there is a common misconception about the economy, where people tend to think of the consumer as one homogenous group. He pointed out that there isn’t a single consumer whose behavior can explain the overall economic trends. Instead, Cramer identified two distinct types of consumers in today’s market.
“One consumer’s going out looking for absolute bargains. The other consumer’s looking for what I call “premium value” or “value at a price”. More expensive, but relative to similar offerings, you get a great deal.”
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This conclusion came after Cramer listened to a variety of retail and restaurant earnings calls. He expressed skepticism about relying on broad aggregate data, such as national retail sales, which he believes doesn’t capture the full picture. Instead, Cramer prefers analyzing individual companies, piecing together information from different sources to form a clearer sense of the consumer landscape. He believes this approach provides a more accurate snapshot than relying on overarching statistics.
Cramer also noted that the rise of these two different consumer types has perplexed Wall Street. In the past, there was typically one consumer who either spent or didn’t, but that has changed. Now, there are two groups of consumers, each spending in different places.
In his conclusion, Cramer urged investors to stop focusing on whether consumers are struggling financially or facing challenges. The key, he said, is understanding choice.
“The bottom line: Stop trying to figure out if the consumer’s cash strapped. Forget the headwinds. What matters is choice. Right now, consumers are lapping up absolute value at the lowest price or premium value, meaning better stuff that’s a good deal versus the competition. But everything else? Maybe not so much. Hence why the aggregate numbers just don’t tell the story.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 19. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A manager standing in a hypermarket, pointing out items available for wholesale.
Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Cramer noted that bargain hunters enjoy Walmart Inc. (NYSE:WMT) and mentioned the company’s low prices.
“This cohort also enjoys going to Walmart. Can’t believe how low the prices have become. They’ve taken down a lot of prices, cheaper than the dollar stores in many cases now that those places have broken the buck. Amazing designer clothes, can’t-be-beat prices.”
Walmart (NYSE:WMT) is one of the most recognizable names in retail and it offers an extensive range of products that cater to a variety of consumer needs. According to CEO Doug McMillon, while general merchandise costs are now lower than a year ago, they still remain higher than they were two years ago for similar items. To address these concerns, the company has focused its pricing strategies on maintaining affordability for shoppers.
Management highlighted that the company’s “Everyday Low Prices” approach was well-received by customers in its third quarter, offering some relief amid ongoing economic challenges. John David Rainey, Executive Vice President and Chief Financial Officer, emphasized the importance of continuing to offer lower prices across both national and private brands, particularly in the U.S.
In line with this strategy, Walmart (NYSE:WMT) implemented price rollbacks on about 6,000 items, including around 3,000 grocery items. Additionally, nearly 2,000 of the price rollbacks from the previous year have been converted into permanent, long-term price reductions. Despite these efforts, Walmart’s CFO acknowledged in a CNBC interview that there may still be instances where prices will increase for consumers. However, he emphasized that the company would continue to work closely with suppliers to help reduce prices wherever possible.
Overall WMT ranks 1st on our list of the restaurant and retail stocks Jim Cramer recently talked about. While we acknowledge the potential of WMT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.