The theme for
Mad Money this week has been Cramer’s quest to crown the discount king. He believes, even though he is bullish on the stock market, there must be a discount retailer stock that stands out above the rest. Thus far he has disqualified both TJX Companies (
TJX) and Costco (
COST), but BJ’s Wholesale Club (
BJ) is still in the running. Last night, he delved into Big Lots (
BIG), which recently reported a very good quarter and raised guidance for the second straight quarter. As Cramer mentioned, only Apple (
AAPL) and Salesforce.com (
CRM) have beaten the street’s view and raised guidance in any “meaningful way”.
At Ockham, we wrote a blog commentary on the outstanding report from Big Lots on Tuesday in which we reiterated our Undervalued stance on the stock (Big Lots Raises Guidance for the Second Straight Qtr). Below are the most important parts of Cramer’s monologue as it relates to his search for the discount king.
“I want to come back with another retail name in the low-price retail spats, Big Lots. B-I-G for all of you home gamers. This hasn’t been one of my favorite retail stocks but yesterday it reported a monster, that’s right. Earnings per share coming in at 35 cents, 5 cents more than what the street was expecting. And it raised its guidance for the year… you know what that is, that is the double play we’re looking for and only Apple and Salesforce.com have given us that combination in any meaningful way…
Big Lots, like TJX, sells closeout merchandise. It buys brand name products from vendors who have too much inventory and are ready to fire-sale their goods, sell, sell, sell. Where Big Lots buys in bulk, a la BJ’s and Costco…It’s because Big Lots was much more confident about the second half on its conference call that TJX has been. Management sees major improvements in earnings and same-store sales in the fourth quarter. While TJX had a much more negative outlook.
