WFC, WMT, TGT, COST: Jim Cramer's Views

Jim Cramer shares his views on bank stocks and Christmas prospects. Wells Fargo, Walmart, Target and Costco are among the stocks discussed here.
By Jim Cramer ,

NEW YORK (Real Money) -- Jim Cramer shares his views every day on RealMoney.Click here for a real-time look at his insights and musings.

Bank Stocks Are Stuck in No Man's Land

Posted at 3:39 p.m. EDT on Friday, Oct. 30, 2015

These bank stocks can't catch a break. No matter how much money they raise, no matter how much they reserve, it is never enough.

I get that the banks were bad actors from 2007 to 2009. I get that there should have been more punishment directed at the executives. I understand that many failed. However, it has become a national obsession that banks raise capital, including the new rules, which are, once again, meant to deal with banks that are too big to fail. So they are all getting hammered and are in the midst of rolling over and giving up all of Wednesday's gains.

And don't believe these regulations are done. I caught Hillary Clinton the other day on Colbert and she was making jokes about how banks would be allowed to fail, and she got a big applause. If she gets elected, I could see where the banks would be forced to lend to those who couldn't repay as part of an overall plan to enhance equality.

This group is key to the next leg. You can't lose it if you want the market to go higher -- too much market cap. There's not enough good happening away from the sector. My take: You can't initiate a new position in this group unless the employment rate next Friday is high.

It's in no man's land now: Cheap but with the possibility of getting cheaper and making me regret that Action Alerts PLUS, my charitable trust, didn't sell more Wells Fargo (WFC) - Get Report when we had a chance.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long WFC.

Walmart Looks Set for the Worst Kind of Christmas

Posted at 7:11 a.m. EDT on Friday, Oct. 30, 2015

Wherever I go, people want to know if it is okay to buy Walmart (WMT) - Get Report. They want to get their hands dirty with this company, because they figure it's got a big yield and it's got to "turn."

I agree that it has a decent sized yield. I think, however, that the yield can get bigger -- but not the way you like.

I think the stock can go lower still. A 3.38% yield doesn't offer enough protection yet, even one as safe and as covered as that of Walmart.

Why? Many reasons.

For starters: last night, Action Alerts PLUS charity portfolio holding Target (TGT) - Get Report announced it would suspend any fees for products bought on their website from this weekend to the holidays. It's a gutsy move. Last year, Walmart had free shipping if you bought over $50, which I think is a mistake, given Walmart's lower demographic.

This shipping decision by Target is just one more move in a widely unheralded turnaround that Brian Cornell is leading, a turnaround based on an experiential change in the stores -- boy, do they look good -- coupled with an aggressive web strategy that now includes international offerings. If you haven't been to your Target lately, you should go. You would be surprised at how amazing it looks and how much excitement and pull the company's store brands have vs. the expensive branded stuff. Target, like Costco (COST) - Get Report, has better private label that is also cheaper than that of the brand names.

Speaking of Costco, we tend to forget that the chain has slightly more than 500 stores in the U.S. vs. 10x that for Walmart. While that may be an advantage for Walmart in terms of its order online, pick up strategy, it means that Costco's got a lot more turf to encroach on Walmart, something it has to be doing if it has 8% same store sales. Those numbers have to be coming from some other chain. They aren't spontaneous.

Plus, Costco has a cost advantage both from its superior private label Kirkland and its club membership, unlike a regular Walmart store.

So you have two brick and mortar challengers in addition to the ever-changing, ever morphing, deliver millions of products to your home, some same day, Amazon.com  (AMZN) - Get Report enemy. Amazon.com is a holding in the Growth Seeker portfolio.

There is, however, one thing that Walmart has in its favor, and it is an odd one: the guide-down. The company has taken all expectations out of its projections. That allows it to do something bold, bolder than anyone. Can it do it?

Not with the current offerings and plans, it can't. What does it need to do? After it has upgraded its talent and spruced up its stores, it can, because of its massive cash flow, try something very different and gutsy.

What are some outside-the-box ideas? OK, if you had unlimited capital to play with and didn't care about earnings, you could strike a deal, say, with T-mobile, to slice your phone bill so low that you could save a considerable amount, but that amount would be in scrip that could only be used at Walmart.

You could offer all customers free internet provided they spend either $100 online at Walmart.com or $50 in the store on specially marked items -- so you don't take too much of a beating. You could offer something well, well below cost at all stores on a rotating basis -- yes, the fabled blue light special special -- except make it so that it's only available with a Walmart charge card. Or you go to Starbucks (SBUX) - Get Report and you tell Howard Schultz you are going to give the coffee away to anyone with a Walmart charge card and reimburse the coffee company.

That's why I didn't want CEO Doug McMillon to commit to that $20 billion buyback over the next two years. These ideas might cost half of that, but it would be better spent than propping up the un-prop-able.

With what I have seen so far, it is going to be a Target-Amazon Christmas, the worst kind of Christmas for Wal-Mart. Now, I know my ideas will be rejected by McMillon, but I will tell you this: If you don't think my ideas wouldn't get people into stores, then I have wasted a lifetime of studying retail through my father's eyes -- and no one knew retail better than that man. By dint of the job he did for 70 years, first working at a department store, and then selling boxes and bags and ribbons and bows and tape and giftwrap for 60 years, he knew.

Right now, Walmart didn't. Until I just told them.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long TGT, COST and SBUX.

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