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Cramer Quick Take: Costco's Worth Premium

Stocks in this article: COSTTGTWMTSBUX

NEW YORK ( TheStreet) -- Jim Cramer was in a retail mood, speaking with TheStreet's Debra Borchardt about Costco (COST) after its recent quarterly earnings report.

Investors were slightly surprised when Costco, a holding of Cramer's Action Alerts PLUS, delivered such strong numbers this morning, especially after the heavy weakness seen in Target (TGT) and Wal-Mart (WMT) after their quarterly reports.

According to Cramer, the most surprising thing was Costco subscriptions actually increased after the company recently raised membership fees. Most people would expect some sort of drop because of the price hike.

Investors and analysts have started to think Costco is getting overvalued, especially compared to its peers. Cramer doesn't think so -- he thinks they're comparing Costco to the wrong types of companies.

Costco, he said, "should trade at a massive premium to these other guys because it's a classic growth stock with a revenue stream that can be modeled."

While there is clearly a shortage of Costco stores nationwide, it's because management is very picky about location and does not want to cannibalize its current stores.

Cramer concluded Costco is "more like a Starbucks (SBUX) than it is like a Wal-Mart."

-- Written by Bret Kenwell in Petoskey, Mich.

At the time of publication, Cramer's Action Alerts PLUS had a position in COST.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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