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Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways for next week's trading.
Whole Foods Market ( WFM) versus Sprouts Farmers Market ( SFM - Get Report) : It looks like Whole Foods Market has gotten its groove back while the recent king of organic grocers, Sprouts Farmers Market is in decline.
Shares of Whole Foods are up 20% in 2016, while Sprouts has seen its shares tumble by 12%. Cramer said those moves are warranted, as the weakness in Sprouts doesn't seem to be a one-time stumble.
The problem with Sprouts is simply competition, Cramer explained. As more grocery stores and others such as Walmart (WMT - Get Report) , carry more organic items, Sprouts will have a tougher time generating explosive growth.
Sprouts also made a dangerous decision to partner with Amazon.com (AMZN - Get Report) in select markets. Cramer said while the deal allows Amazon Prime members to buy from Sprouts, it also puts Sprouts in direct competition with Amazon, which also sells organic items, often for less. The arrangement can only hurt Sprouts' margins over the long term.
Meanwhile, Whole Foods' new "365" stores mark the beginning of a comeback that features more private-label offerings with higher gross margins. The new, smaller-format locations bring new customers into the Whole Foods family.
Cramer said Whole Foods is a buy at current levels but he can't say the same for Sprouts.
Ulta Salon (ULTA - Get Report) : How does beauty and cosmetic retailer Ulta Salon continue to outperform quarter after quarter? The company just reported a monster 16-cents-a-share earnings bet with 39% earnings growth and a 15% rise in same-store sales. Ulta also bought back one million shares of its own stock and raised guidance. Shares of Ulta are up 28% this year at new all-time highs.
Ulta CEO Mary Dillon attributed the terrific results to strength in cosmetics, fewer promotions and a growing ecommerce platform that is bringing new customers into stores. The company also boasts 19.4 million members in their loyalty program.
Cramer said it's clear that Ulta knows what its customers want and have perfected the precision execution needed to give it to them. The stock is expensive, he admitted, trading at 31 times earnings. But if Ulta doesn't deserve the premium, Cramer concluded, who does?
Dollar Tree (DLTR - Get Report) and Dollar General (DG - Get Report) : Rounding out his week-long series on duopolies, Cramer returned to one of his favorite retail destinations, the dollar stores, looking into Dollar Tree and Dollar General.
The dollar stores were transformed into a duopoly after Dollar Tree acquired Family Dollar last year. Since last July, shares of Dollar Tree are up 14%, with Dollar General rising 17%.
After some initial weakness and downgrades last fall, the dollar stores returned with a vengeance after both companies reported terrific results last week. The reason? Cramer said the dollar stores don't need to worry about an "omni-channel experience," they can just focus on giving customers what they want. That's why the dollar stores keep taking share from the likes of Walmart (WMT - Get Report) and Target (TGT - Get Report) .
Cramer said while he still likes both companies, Dollar Tree remains a play on the synergies they can squeeze out of the acquisition, while Dollar General remains the consistent earner that is not only cheaper but affords less risk.
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