“…Costco has simply executed poorly this year. I expect improvement, but I can’t wait for it when B.J.’s stock beckons. I want to make it really clear, I vastly prefer going to Costco over going to a B.J.’s…

I love regional/national plays B.J.’s got 180 stores mostly in the northeast and southeast. Costco has 557 worldwide, they’re more concentrated in the west and south. Retail stocks tend to run out of the room to run higher when the underlying companies. Walmart peaked when they were basically in every state. B.J.’s has plans to accelerate the store growth. Costco is opening 15 this years, but it’s three times the size as B.J.’s. By the way, B.J. had always had a problem trying to site stores. Now, they can add stores, because real estate is cheaper. That’s not the case a year ago.

B.J.’s is a better company, B.J.’s trades at 12 times expected earns. Costco is rich at 18. Again, because everybody loves the product. But the difference is not justified… I told you B.J.’s has superior execution with store units. Costco in this game is 2 for 4 and I think the valuations will reverse themselves and B.J. will trade at a premium. Here’s the bottom line. B.J.’s is a contender for discount king.”– CNBC’s Mad Money 8/25/2009

This week, Cramer is searching for the discount king, and on Monday he ruled out TJX Companies (TJX) from the competition.  When discussing discount retailers, the conversation quickly turns to warehouse stores which offer deep discounts for bulk purchases.  There are three major players with Costco (COST), B.J.’s Wholesale Club (BJ) and Sam’s Club (WMT), but only the first two have the majority of their business derived from actual warehouse retail.  Take a look at the factors Cramer judged the companies on.