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TheStreet Open House

Why Jim Cramer Likes Dollar General (DG) Stock But Not Wal-Mart (WMT)

NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Dollar General  (DG) shows the power of monthly sales numbers even though most retailers have stopped reporting them.

Cramer notes Dollar General's top line and bottom line were disappointing, but the company said April was better and May is continuing to improve. He says the progression of positive numbers excites investors. Dollar General also received two analyst downgrades last week, but Goldman Sachs recommended the stock earlier. Cramer says consumers are still trading down and are still shopping at Dollar General.

Must Watch: Jim Cramer Says Dollar General Still Benefits From Frugal Consumer

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TheStreet Ratings team also likes Dollar General, as it rates it a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:  "We rate DOLLAR GENERAL CORP (DG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Finally, Cramer suggests investors stay away from Wal-Mart  (WMT). He is trying to warm up to Target  (TGT) because of its dividend, but he says dollar stores, particularly Dollar General, still work.

TheStreet Ratings team is also lukewarm on Target, as it rates it as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation: 

"We rate TARGET CORP (TGT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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