Why Jim Cramer Sees Buying Opportunities in Lululemon (LULU), Costco (COST)

NEW YORK (TheStreet) -- TheStreet's Jim Cramer discusses two stocks in which he sees opportunities for investors to buy.

First, he talks about Lululemon  (LULU) . He says he thinks this quarter will be "better" but still "horrible" because he does not think the company is executing well.

But he put an initial position on the stock for his Action Alerts PLUS Portfolio and said $42 was the floor, at which point investors want to buy a lot more because large shareholders would kick in and say this is a great brand that is under-managed.

Must Watch: Cramer: Take Advantage of Opportunities to Buy Lululemon, Costco

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

Therefore, he thinks investors can win both ways. He suggests possibly putting half a position on now and then buy the other half if the stock goes down. If the stock goes up, then you have a solid gain.

Cramer also expects Lululemon to be taken over because it has two valuable franchises but is too under-managed. He adds if the stock rises, then the company would not have to worry about that, but it currently trades at 22 times depressed earnings, which Cramer calls "a little absurdly low" for companies like VF Corp.  (VFC) or Nike  (NKE) that might want to add a new franchise to their portfolio.

Cramer also talks about Costco (COST) , which he calls "the great American retailer for the moment." He notes the company does not have many stores and could put up more, and it also has a tremendous steady labor force that helps gross margins because Costco does not have to train many workers.

He also points to Costco's deal with Apple  (AAPL)  to return the tech giant's products to Costco stores as another positive sign. He adds investors must recognize that Costco will get a higher multiple for its higher earnings.

Cramer says the low store count indicates multiple years of growth ahead, so he suggests buying the stock on "every single dip."

Cramer notes some investors always say Costco is done, and they say the same about Nike, 3M  (MMM) , and Starbucks  (SBUX) . But he believes "the great companies are never done."

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

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