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 Williams-Sonoma, Inc. (NYSE:WSM) 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.”
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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).
An interior of a modern home with a wide selection of cookware, tools and cutlery on display.
Williams-Sonoma, Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 35
Cramer discussed that Williams-Sonoma, Inc. (NYSE:WSM) is one of the companies offering value at a price and has great numbers as well.
“Darden joins three other premium value businesses, Williams-Sonoma, Ralph Lauren, and Lululemon. All had great numbers, also goods that cost a lot of money yet in each case, consumers recognize that their product is worth every penny. That’s why I call it premium value or value at a price. If you’re willing to pay up for quality, but you’re still somewhat cost-conscious, they got you covered.”
Williams-Sonoma (NYSE:WSM) is a specialty retailer that operates both online and in physical stores, offering a diverse range of home products such as cookware, furniture, bedding, lighting, and home decor. CEO Laura Alber recently spoke about the company’s pricing strategy in the current consumer environment during an appearance on Mad Money. She emphasized the importance of being transparent about costs and criticized the short-term promotional and discount strategies employed by some competitors.
According to Alber, such approaches often train customers to wait for promotions, which ultimately undermines long-term success. Instead, she highlighted the value of maintaining “pricing integrity” by setting prices that customers can trust from the outset. During the third-quarter earnings call, CFO Jeff Howie shared that Williams-Sonoma (NYSE:WSM) has been actively reducing its reliance on China-sourced products, decreasing the share from 50% to 25% over the past few years.
He noted that as tariffs evolve, the company is well-positioned to adapt, thanks to its scale and strategic flexibility. Management also pointed out that by designing and sourcing its products directly, the company is able to secure better pricing, which contributes to its ability to navigate shifting market conditions and maintain its competitive edge.
Overall WSM ranks 8th on our list of the restaurant and retail stocks Jim Cramer recently talked about. While we acknowledge the potential of WSM 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 WSM 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.