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Wal-Mart Stores

(WMT) - Get Report



(TGT) - Get Report

upgraded? Well, that just doesn't seem right.

But according to Jim Cramer during Tuesday's "Mad Money" broadcast, Goldman Sachs' actions had zero to do with the current performance of either of the companies.

The two discounters are serving as compasses for how analysts believe the economy is performing. And right or wrong, it looks like they think things are getting better.

Wal-Mart has been gaining market share during the recession from consumers who are trading down on price. But if the economy recovers, analysts say it will no longer be the destination of choice.

Adrianne Shapira, analyst at Goldman Sachs, wrote in a note on Monday that there is

limited opportunity for the company to generate the same rates of improvement

as it has seen in prior quarters.

Shares of Wal-Mart have fallen 11% in the year-to-date period as a result.

Target, on the other hand, a slightly more upscale venue with less aggressive discounting, is poised to do well if the economy recovers in the near-term as believed. Shares of Target gained 16% during the year.

But if you were to just look at the numbers, you'd see Wal-Mart is the clear winner.

During Wal-Mart's first quarter it earned $3.02 billion, or 77 cents per share, hurt by 4 cents per share because of currency effects. Revenue fell .6% to $93.47 billion, while U.S. same-store sales jumped 3.7%, excluding fuel.

Target posted a 13% decline in earnings for the first quarter ended May 2. The company earned $522 million, or 69 cents a share, compared with $602 million, or 74 cents per share, a year earlier.

Revenue remained relatively flat at $14.83 billion, while total same-store sales dropped 3.7%. This marked the seventh consecutive drop in quarterly sales.

The company, which is better known for its trendy apparel and furniture (about 40% of its business) than basic household goods, has begun testing groceries, a category that has done well for Wal-Mart (accounting for about half of its U.S. sales.)

But Cramer said he's not a fan of either company, and feels that while Target may be a better choice right now, rising gas prices make both retailers too risky.

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