• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Cramer: Stay With the Winning Horse

When they aren't winning, they're hard to turn around.
By JIM CRAMER
Mar 17, 2015 | 05:11 AM EDT
Stocks quotes in this article: URBN, M, ROST, TJX, JACK, CMG, SBUX, DNKN, CVS, RAD

We are now in leader-versus- laggard zone, and that's one of the most fraught moments in investing.  In other words, after a big run in the best groups for the year, now you have to decide: when you buy something, do you buy a stock that's already soared and might be tapped out, or do you buy something that hasn't moved much at all and might be suspect or has just been left behind for no real good reason?

Let's take the most glaring cases right now: retailers and restaurants.

Urban Outfitters (URBN) would be the company that now has the strongest fundamentals in the industry. It is a three-legged beast: Free People, which has always been strong, Anthropologie, with a fantastic new home furnishing look, and Urban, the namesake business which has gone from negative to positive comps helped by a really terrific new set of designs. The transformation is stupendous.

But so is the stock. It's up an astounding 26.73%, besting all retailers. You would now be coming into the retailer with the most momentum in the country by far, yet with a stock that you have to believe reflects a tremendous amount of what has transpired.

Now let's contrast that with Macy's (M). Here's a stock that has done absolutely nothing, in fact, it's off 2.46%, a truly sour performance. Can it get better? Of course. However there is no catalyst, it doesn't report until May and I don't see any real growth or real turn.

All things considered, I would rather buy Urban Outfitters, because I know that retail investing is momentum driven and I know that Urban just reported its first real good quarter in ages. Macy's? It's cheap, but I lack a thesis for buying it other than Terry Lundgren's a good CEO and he will figure it out.

How about Ross Stores (ROST) and TJX (TJX)? Here are two off-priced retailers that are certain to benefit from the clothing stalled by the port slowdown out west that now must be offloaded to one of these two because the season was missed. TJX has put out terrific numbers over time, but that last quarter gave you guidance that the street didn't like.

In the meantime, you have Ross just delivering and delivering. But Ross is up 13% and TJX is flat and Ross has a 22 multiple and TJX sells at 20x earnings. In this case, I would say buy neither, but if Ross Stores comes down, just buy it as the company has a lot of room to expand and is very easy off price story to comprehend without all of the TJX's moving parts.

How about the restaurant group? Tough. There's Jack in the Box (JACK), which I love and has been putting out powerhouse numbers from its namesake stores and there's been a huge turn in Qdoba, making it the company to beat in two different quick serve categories. And then there's Chipotle (CMG), the best of breed, which is actually unchanged for the year. I am a huge fan of JACK, but how can you not want to play catch-up with Chipotle? I would go for the latter, unless JACK came in hard.

There's a whole host of these: Starbucks (SBUX) vs. Dunkin (DNKN), CVS (CVS) vs. Rite Aid (RAD). Endless. Each needs to be puzzled over; there are no easy answers.

These are the decisions everyone's making right now: to trade down to something that hasn't moved hoping that the stock plays catch-up on any good news, or to keep riding the winning horse. It's case by case, and it's always been like this after a run. There's no cut-and-dried answer, but you never go wrong, oddly, with the winning horse because horses win for a reason. When they aren't winning, they are very hard to turn around.

Get an email alert each time I write an article for Real Money. Click "+Follow" next to my byline on this article.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long SBUX.

TAGS: Investing | U.S. Equity | Consumer Discretionary |

More from Consumer Discretionary

Cruise Operator Carnival Still Isn't a Stock I Want to Climb Aboard

Jonathan Heller
Apr 9, 2021 9:00 AM EDT

The window the company offered this week on its results and financial state continue to give this value investor pause.

Norwegian Cruise Line Finally May Be Cruising Toward Higher Prices

Bruce Kamich
Apr 6, 2021 9:01 AM EDT

However, the technical signals of the cruise line operator don't entirely indicate smooth sailing ahead.

2 Land Plays That Insiders Are Buying

Bret Jensen
Mar 31, 2021 8:30 AM EDT

Green Brick Partners and Limoneira Co. offer reasons to buy their shares beyond the recent insider purchases of stock.

Peloton Has Disappointed: Take Your Leave and Sell

Bruce Kamich
Mar 24, 2021 9:33 AM EDT

We're checking in on the PTON charts again.

Live Nation Entertainment Is Not Yet Ready for Prime Time

Bruce Kamich
Mar 22, 2021 12:44 PM EDT

Traders should let the correction in LYV play out on the charts and stage.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • 11:18 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 5 Pillars of Exceptional Trading
  • 08:05 AM EDT BOB LANG

    Bitcoin vs. Gold: Which Should You Invest In Now?

    Read my article TheStreet here!
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login