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Market players spend way too much time talking about teenage apparel, Jim Cramer told viewers of his "Mad Money" TV show Monday.
Cramer believes that it's time to shift focus to a younger demographic and start buying some kiddie-apparel stocks. The two plays Cramer likes in this area are
The Children's Place
As teenage-apparel stores, such as
Abercrombie & Fitch
continue to eat one another, Cramer believes that finding a winner here could be difficult.
One of these stocks could make you money, he said, but it would be difficult to choose which one. On this show, we favor monopolies, he said.
The growth in the apparel world is in the children's apparel group, he said. Here there are only two big players: Gymboree and the best-of-breed, The Children's Place.
Both of these kiddie-apparel stocks are worth buying, according to Cramer. Not only do they both have terrific management, but both are feasting off the vicious decline of GapKids, a division of
Gymboree and The Children's Place can both win because two's company, not a crowd, he said. It's a happy-go-lucky duopoly and the place to be heading into the fall.
Gymboree is all about growth, as it recently set its sights on the boys' and newborns' market. Not only has the company shifted into new genders, but it also has larger sizes, Cramer said,
He added that the company's second quarter was not a loss because Gymboree whipped itself into shape, he said.
"It's done something to differentiate itself from stocks," he said. "Its management has raised its numbers and negotiated better deals with suppliers."
We've given up on teenagers because they can't make you money, Cramer said. You don't want to buy a petulant stock that doesn't do what you want it to; you want to buy something more docile.
That's why Cramer suggested going into the children's apparel market, where the No. 1 retailer in the space, Cramer iterated, is The Children's Place. In fact, he believes it's the best retailer out there, period.
The Children's Place is the one stock people must buy for the back-to-school season, Cramer said, adding that he wishes he owned it for his charitable trust
Action Alerts PLUS.
This stock has given market players the biggest bump in the retail sector that we've seen in ages, he said. The Children's Place has serious earnings momentum and is not even underpromising.
The company is simply over-delivering, Cramer said.
The company bought out all of the Disney Stores and is selling under the Disney Store brand name. Although The Children's Place does have a gigantic amount of inventory, which normally would make Cramer nervous, all he can see is huge sales in the back-to-school season.
Multiple contraction is the hidden cancer that is affecting all high-multiple stocks, Cramer said.
First this disease hit
, then it hit
and Monday it sent
to the hospital.
It's a bearish disease, he said, adding that there are five reasons why he believes that high-multiple stocks are getting crushed right now.
First, when the
is raising its rates, Cramer said people are not supposed to own high-multiple stocks, simply for the reason that they are valued on their high-future earnings.
But future inflation worries could hurt the stock's future earnings, he said.
Second, Cramer said people shouldn't buy a high-multiple stock with a multiple that is twice the stock's growth rate.
Third, high-multiple stocks are all priced for perfection, but most can't deliver, he said. On Monday, Hansen Natural reported good numbers that were in line; the stock got killed.
If you have stock with a high multiple, it needs to report a better-than-expected quarter or it will probably lose that multiple, Cramer emphasized.
Reason four, is high-multiple stocks need to beat estimates, not just meet estimates.
Finally, reason five has to do with the selling. Once you see high-multiple stocks start to fall, they will plummet overnight as investors start selling.
Whole Foods, Starbucks and Hansen Natural are all in this transition period right now, he said. They have been battered and abused by the market, but don't buy them on weakness, Cramer warned, because there may be more to come.
California Pizza Kitchen
Co-CEO Rick Rosenfield to the show and asked him what the company's saturation point could be.
As the company moves to new areas of the country, it continues to see more and more opportunities, Rosenfield responded, adding that he doesn't see any end in sight.
When Cramer asked Rosenfield to compare his company's numbers with those of
, Rosenfield said he does not consider Domino's a competitor, as California Pizza Kitchen is a full-service restaurant.
However, he said, the company's numbers are a result of California Pizza Kitchen as an emerging brand.
"We have a great company culture, service and food," Rosenfield said.
Talking about guidance and what might keep the stock propelled, Rosenfield said the company doesn't think about propelling the stock, but focuses on delivering good food and high-quality service.
With that, the stock price is going to have to take care of itself, he said.
Cramer called California Pizza Kitchen a bull story and recommended staying long if you have it, and buying it if you haven't already.
To view Cramer's interview with Rick Rosenfield, please click here.
Cramer was bullish on
Procter & Gamble
Sirius Satellite Radio
Cramer was bearish on
In the "Sudden Death" round, Cramer was bullish on
South Financial Group
T. Rowe Price Group
He was bearish on
For more of Cramer's insights during the most recent Lightning Round, click here.
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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."
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