We recently compiled a list of the Jim Cramer Discussed These 11 Restaurants and Retail Stocks. In this article, we are going to take a look at where Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) stands against the other restaurant and retail stocks Jim Cramer recently talked about.
Jim Cramer, the host of Mad Money, recently took a closer look at the state of the consumer, focusing on restaurants and retailers to understand the broader economic picture. According to Cramer, there is a common misconception about the economy, where people tend to think of the consumer as one homogenous group. He pointed out that there isn’t a single consumer whose behavior can explain the overall economic trends. Instead, Cramer identified two distinct types of consumers in today’s market.
“One consumer’s going out looking for absolute bargains. The other consumer’s looking for what I call “premium value” or “value at a price”. More expensive, but relative to similar offerings, you get a great deal.”
READ ALSO Jim Cramer Recently Discussed These 7 Stocks and 6 Stocks Jim Cramer Talked About This Week
This conclusion came after Cramer listened to a variety of retail and restaurant earnings calls. He expressed skepticism about relying on broad aggregate data, such as national retail sales, which he believes doesn’t capture the full picture. Instead, Cramer prefers analyzing individual companies, piecing together information from different sources to form a clearer sense of the consumer landscape. He believes this approach provides a more accurate snapshot than relying on overarching statistics.
Cramer also noted that the rise of these two different consumer types has perplexed Wall Street. In the past, there was typically one consumer who either spent or didn’t, but that has changed. Now, there are two groups of consumers, each spending in different places.
In his conclusion, Cramer urged investors to stop focusing on whether consumers are struggling financially or facing challenges. The key, he said, is understanding choice.
“The bottom line: Stop trying to figure out if the consumer’s cash strapped. Forget the headwinds. What matters is choice. Right now, consumers are lapping up absolute value at the lowest price or premium value, meaning better stuff that’s a good deal versus the competition. But everything else? Maybe not so much. Hence why the aggregate numbers just don’t tell the story.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 19. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of shoppers selecting items from a wide range of brand-name merchandise in a discount store.
Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI)
Number of Hedge Fund Holders: 32
Recounting stocks that bargain hunters love, Cramer mentioned Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) and said:
“They found Ollie’s Bargain Outlet and… they’ve got so many people volunteering for that army. Any officer or grunt can get outstanding, outstanding prices from closeouts.”
Ollie’s Bargain Outlet (NASDAQ:OLLI) is a retailer specializing in a wide variety of brand-name products. During its third-quarter earnings call, management highlighted that current market trends, such as consumers’ increased demand for value and suppliers’ need for larger partners, have been beneficial for the company. The company’s core approach is to provide quality name-brand items at prices typically 20% to 70% lower than those found in more upscale retailers.
John Swygert, Chief Executive Officer said, “Anyone can sell cheap products but we’re all about real brands, real bargains. This has been our value proposition from day 1 and continues to be our competitive moat.” Management also emphasized the company’s long-standing expertise in the closeout business, with over 42 years of experience in offering customers excellent value.
Ollie’s Bargain Outlet (NASDAQ:OLLI) thrives in times of disruption, and management noted that possible tariffs can present an opportunity for further closeout deals. With some traditional retailers potentially priced out of certain goods due to increased tariffs, Ollie’s is well-positioned to acquire these products at bargain prices, allowing it to maintain its competitive edge as a price follower in the retail industry.
Overall OLLI ranks 9th on our list of the restaurant and retail stocks Jim Cramer recently talked about. While we acknowledge the potential of OLLI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OLLI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.