Jim Cramer Likes Costco and Walmart
CNBC's Jim Cramer believes Costco and Walmart stocks have long-term strength. These retailers have scale and fat margins, and they are largely domestic. The post Jim Cramer Likes Costco and Walmart appeared first on 24/7 Wall St..
Jim Cramer believes that the swings in the market make it hard to find stocks that have long-term strength. Yet, he hasn’t given up on certain sectors.
24/7 Wall St. Key Points:
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CNBC’s Jim Cramer believes Costco Wholesale Corp. (NASDAQ: COST) and Walmart Inc. (NYSE: WMT) stocks have long-term strength.
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These retailers have scale and fat margins, and they are largely domestic.
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On CNBC, Cramer named sectors he thinks will not be damaged by economics behind market fluctuations. At the top of his list are cybersecurity and health insurance. He also added two retailers to his list: Costco Wholesale Corp. (NASDAQ: COST) and Walmart Inc. (NYSE: WMT).
Cramer told his “Mad Money” viewers, “I see several things the winners have in common. They don’t have a lot of competition. They’re largely domestic. They don’t need a strong economy. You can’t tariff them out of existence. They have scale, and most have fat margins.” He likes Walmart and Costco because of their size and the low prices of the items they sell.
As the S&P 500 has sold off by 4% in the past month, Walmart’s stock is up 11% and Costco’s has risen 8%. Walmart has 4,615 locations in the United States. It claims its store footprint is so large that 90% of Americans live within 10 miles of a Walmart location.
Promising Retailers
In the most recent quarter, Walmart’s revenue rose 4.1% to $180.6 billion. Operating income rose 8.3% to $7.9 billion. More important for investors, Walmart forecast that in the current year revenue would rise 3% to 4% and adjusted operating income would be up 3.5% to 5.5%. CEO Doug McMillon said, “We’ve learned how to manage through turbulent periods, especially these last couple of years, it has been one thing after the other.” He added that low prices would help its position in the retail market.
Costco has something no other retailer has. Its membership fees are small compared to retail sales, but they boost its margins. Membership fees are 2% of revenue but 73% of gross profits. In the most recently reported quarter, revenue was $62.5 billion, up from $57.3 billion in the same quarter the year before. Per-share earnings rose to $4.03 from $3.93. Costco has 617 locations in the United States and Puerto Rico.
Tariffs are bound to affect American retailers. Cramer thinks that there are two that remain promising.
The post Jim Cramer Likes Costco and Walmart appeared first on 24/7 Wall St..
