Rent Retailers, Don't Own Them

Retail's blinking. Home Depot (HD - commentary - Cramer's Take) is finally admitting we are overstored. So is Starbucks (SBUX - commentary - Cramer's Take). We know for sure that Linens-n-Things isn't putting anything up. Sears (SHLD - commentary - Cramer's Take) needs to sell stores NW.

It is finally happening. A recognition that was so obvious for so long: we built too many stores and don't have enough customers.

Nowhere is this more obvious than in California and Florida, where many restaurant chains have just been crushed and left for dead. There are many, many chains that are hanging on by a thread. I think the next thing you are going to hear about is whether Circuit City (CC - commentary - Cramer's Take) is going to pay vendors.

It is about time. What should happen in slowdowns is that losers lose and fold. We haven't seen it anywhere. We just now got Corus Bank (CORS - commentary - Cramer's Take) in trouble; that should have happened ages ago. We knocked out a couple of mortgage brokers, but there are still plenty hanging in. Centex (CTX - commentary - Cramer's Take) shows you that homebuilders will not go under as does Standard Pacific (SPF - commentary - Cramer's Take). The banks just won't pull the financing. This is all too bad. You get rallies after the survivors get fit, but they can't get fit as long as the losers hang on.

Should you buy Lowe's (LOW - commentary - Cramer's Take) on this? Should you buy Macy's (M - commentary - Cramer's Take)? How about JC Penney (JCP - commentary - Cramer's Take)?

You trade them for a short-term pop into tax rebates and $600. You trade them for good weather.

But you own them when companies don't just say they are done building. You own them when they shutter competitors. That's your chance for margin expansion and easy compares.

Until then, just rent.

At the time of publication, Cramer was long Sears.

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At the time of publication, Cramer was long Sears.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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