Editor's note (Part 3 of 7): The following is text from Jim Cramer's keynote speech at The Deal Economy Event on Dec. 5 at the New York Stock Exchange, New York City. To watch video replays of the event, click here.
NEW YORK (TheStreet) -- We've got a consumer who -- rich or poor -- no longer feels wealthy and that's a consumer worth investing in. There are two plays on this theme that make the most sense to invest in: Costco (COST - Get Report) and TJX (TJX - Get Report). Costco has prided itself on offering the lowest price for merchandise because it makes its profit on the Costco cards so many of us proudly carry.
I recently pulled up with Craig Jellinek, Costco's chief executive officer, and I am convinced that he is following perfectly in the tradition of retired CEO Jim Sinegal in offering the treasure-hunt experience that is fabulous for customers, but a nightmare for suppliers because Costco rotates through new product constantly and then pulls it just when it feels that the goods have gotten too commonplace. It's the secret -- besides those incredibly good samples and the ultra-low prices -- to the chain's strength.
TJX is a marvel to behold. It's the company that comes with cash to the strapped retailer, the J.C. Penneys (JCP) of the world, and says we will take your excess inventory for dimes on the dollar and then TJX marks it up to quarters on the dollar in a way that the public can't resist.
It truly is the only discounter that has thrived during this period, which has seen Target (TGT), Wal-Mart (WMT), Penney and even Ross Stores (ROST) stumble. I love to shop at the TJ's right across the street from here, buying the same goods that I have seen marked up gigantically at those supposedly discounted retailers.
If you want stability and a slower growth play on the concept, consider Tanger Factory Outlet (SKT), a real estate investment trust that's capitalizing on the inability of major stores to maintain full price. This is the one real estate investment trust I follow that has held up in the face of higher interest rates. I think it will continue to do so.
Click here for Part 2.