Jim Cramer’s List of Stocks to Watch in the Retail Sector

Jim Cramer and Jill Malandrino look at a several retail stocks, identifying potential out and underperformers and some M&A ideas. He is positive on Macy’s, mostly because it got overlooked. Two names that are firing on all cylinders, despite the recent downgrades, are TJX and Ross Stores. Target is a name to watch with Wal-Mart coming out of favor and Sears in Sears in disarray. One name Cramer typically does not recommend is Kohl’s, but it is now starting to look real strong. Staples continue to struggle due to lack of organic growth and acquisitions that are not moving the needle, like General Mills acquisition of Annies. PepsiCo and Dr. Pepper Snapple are two staple stocks Cramer does, in fact, like due to the positive trends in earnings. Many of the larger, legacy names like McDonald’s need to have a wholesale change and put cash to work with meaningful acquisitions to fuel future growth. In restaurants, Cramer continues to like Starbucks, would buy Chipotle here and is positive on Jack in the Box. M&A activity will be key for sector consolidation and restructuring. For example, Coca-Cola should look at companies like Green Mountain, Monster or even Hain for the organic exposure.