Two Retail Stocks to Own When You Must Own Retail

Remember the big retail rally not that long ago? That, like the tech rally, now feels like a total short-squeeze.

Exhibit A in the short-squeeze theory is Liz Claiborne (LIZ - commentary - Cramer's Take), which last month rallied on a really crummy quarter. This heavily shorted name drew tons of buyers, a real head scratcher, but here it is now at its 52-week low.

Many thought that JCPenney (JCP - commentary - Cramer's Take) had reached a bottom and that things going forward would get better. Oops! The stock acts terribly as does its partner, Ralph Lauren (RL - commentary - Cramer's Take), which also had a good run after its last quarter.

Costco (COST - commentary - Cramer's Take) and BJ's (BJ - commentary - Cramer's Take), both with excellent quarters under their belts are being hammered and so, for that matter, is Wal-Mart (WMT - commentary - Cramer's Take) and Target (TGT - commentary - Cramer's Take). The latter, I think, is two to three dollars too high on a relative basis and I would sell or short it here.

In fact the only ones I would buy are Costco and Wal-Mart because value is supreme here and portfolio managers have to own something in retail. These are the two best choices.

Just to be clear, I despise this group. I hate it almost as much as the financials. I even sold my last couple hundred shares of Sears (SHLD - commentary - Cramer's Take) today because I just don't believe it can get through this period without being cut in half, although I do believe it can survive this period. But managers do need to own a retailer, now you know which ones they will buy.

Random musings: Merill Lynch's (MER - commentary - Cramer's Take) John Thain says he is comfortable with his capital position. I say he is comfortable until he is uncomfortable. He also says credit downgrades for the monolines won't immediately impact Merrill's bottom line. Stop it, John, just stop it. Don't comment on this stuff. Get some sense already. You sound like someone who will be spoofed on SNL! ...

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