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Jim Cramer: We Seem to Be in a Period Free of Amazon Fear

What did happen to that fear of Amazon ( AMZN) ? Where did it go? Why aren't people fearful now?

We are seeing some things now that indicate that the age of Amazon as the destroyer of all things retail may be receding, at least for now.

Consider, first, the action in Ulta Beauty (ULTA) . The stock of this once-beloved cosmetic retailer opened down five yesterday on a downgrade from a major firm and very negative comments from the CEO of Ulta partner L'Oreal, that there is some real pricing pressure in the mid-market cosmetics, including those sold to Ulta. (You can take a look at technical analysis on ULTA from Bruce Kamich in this article.)

My jaw dropped when it mentioned Ulta by name. But given that Ulta's stock peaked at $314, it couldn't have been all that shocking at $243, and the stock held. Then buyers came in and brought the stock back to even, and then pushed into the black by a point.

To me, that's the case of the long-awaited downgrade that finally happens, which allows the intrepid to start buying this terrific retailer. For me, the problem is the multiple: 30 times earnings makes it vulnerable the next time you hear Amazon's deciding to make a big push into cosmetics. On Monday, the stocks of Home Depot (HD) and Costco  (COST) made noteworthy stands. These are both one-two punched stocks, meaning people may be less worried about Amazon, but these stocks weren't brought low just by the on-line giant. (Kamich thinks HD's rebound is on shaky ground, you can read why in this article).

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If you recall, we got weakness out of Sherwin-Williams (SHW) and PPG Industries (PPG) in the do-it-yourself paint market in their last quarters, which would have dinged Home Depot on its own, even as Stanley Black and Decker (SWK) gave you nothing negative about the channel.

But then you got the Sears Holdings (SHLD) /Kenmore-Amazon tie-up and everyone went nuts and got all bulled up about Sears and put the hurt on Home Depot.

I think the comeback in Home Depot will be hampered by its relatively high, but not exorbitant 20 multiple, as well as the lingering paint woes. But Sears-Amazon? I think that's another one that seems to be mind- back-burner-ed.

Costco's problematic. It has to compete with Amazon with its own, very second-rate website. Still, at least it isn't third-rate anymore. But it still sells at 27 times earnings. We could look the other way at that if it weren't for the giant expansion of two different German grocery chains into this country, Lidl and Aldi, as well as the more obvious Whole Foods (WFC) buy. So, I don't know how high Costco's stock can go. But it does feel like there is a floor until Amazon pushes into food and the Germans have more of a land grab.

Walmart (WMT) is so close to making fresh highs that you have to think that its Jet.com must be showing some results. It, too, will be faced with Aldi/Lidl, but it sports only an 18 pe multiple, so it might be a bit more immunized.

Jeff Bezos.
Jeff Bezos.

On Monday the trust, Action Alerts PLUS, bought some TJX Cos. (TJX) , because we are now at the moment when its stores will be filled with back-to-school clothes and other items that should have been bought from the big chains that closed stores. There's no food competition, so it does seem safer, and its 18 pe makes for a decent risk reward after a pretty ugly descent into maddening levels.

Even the stock of Walgreen's (WBA) , which has been hit by regulatory sloth and concerns that both its food and prescription drug aisles could be hurt by Amazon's efforts, finally has a decent chart. We exited the remnant position for Action Alerts PLUS, though, to put money in TJX, where I think that the non-Amazon-able case can far more easily be made.

Best Buy's (BBY) another that seems to have found its footing after the news story that Amazon might be developing a base as it came all the way back after a very good quarter.

We see what looks to be a bottom forming in Macy's M, where the dividend does have cash flow support and Kohl's (KSS) has already moved well above where it was when Amazon-mania was in full force.

Finally, even one of the real estate investment trusts connected with an Amazon smack-down, Federal Realty (FRT) , has come back ever since the company's CEO Don Wood came on Mad Money and explained a definitive lack of overlap with Amazon-able properties.

Now, much of this move has occurred during the swoon of Amazon's stock itself. But we are now past day three of the selloff, the one when historically we've seen a bottom in the stocks that led the selloff -- notably FANG -- so let's see if the fear returns.

Right now, though, we seem to be in an Amazon-free zone. Don't know how long it lasts, but it does feel like when the cat's away, the mice will play.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long TJX, WFC.
 
Originally published Aug. 1 at 7:02 a.m. EST.

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