Cramer's 'Mad Money' Recap: Retail Fire Sale

Kohl's Comfort

Reminding viewers that a number of retail stocks have been "justifiably hated," Cramer said there are some that he could get behind, especially if the Fed cuts rates.

Kohl's (KSS Quote - Cramer on KSS - Stock Picks) is a retailer that Cramer said has strangely been "dropped like a rock." The stock is down 28% since an April 20 high, and sales have remained consistent.

The retailer, which earned $269.2 million in its second quarter, trades at 13 times forward earnings and has a growth rate of 18%.

Kohl's has a number of catalysts on its side to help things turn around, such as a new line from high-end designer Vera Wang. In addition to liking their management, Cramer said that the new exclusive brands also bring better margins.

If investors believe that the Fed will ease, then Kohl's is your best risk-reward, and it "deserves to be bought." Besides, no one's focusing on it now, he said.

Few and Far Be Tween

While not a fan of Tween Brands (TWB Quote - Cramer on TWB - Stock Picks) or Children's Place Retail Stores (PLCE Quote - Cramer on PLCE - Stock Picks), Cramer does like American Eagle Outfitters (AEO Quote - Cramer on AEO - Stock Picks).

When looking at retail stocks, Cramer keeps an eye out for insider buying and low evaluations. Cramer found both of those in American Eagle, which he said is "worth buying."

The company's total sales were up 17% to $703.2 million in the second quarter year over year, and it trades at 12 times next year's estimated earnings.

Cramer said that American Eagle is undervalued but not yet at its low point. Investors should wait until next week at the earliest to decide about buying in. The price Cramer has in mind is somewhere between $22 and $25.

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