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Caution With These Jim Cramer Retailer Recommendations (TGT, WMT, DLTR )

|Includes:DLTR, Target Corporation (TGT), WMT

Jim Cramer said the following on the Dollar Store last Friday on a Mad Money episode:

"Dollar Tree is my absolute favorite dollar store. Why? Because I love the candy aisle. And they report too. And I think we need a very strong number. Remember earlier this week, Wal-Mart delivered a lackluster number? I believe that's in part because the dollar stores are nipping at Wal-Mart's heels. And Dollar Tree is one of the winners from that. Wal-Mart versus Dollar Tree, a market share tussle."

I thought I would compare these stocks and see if I agree with Jim. Generally, I see why he likes DLTR over WMT, I estimate its PE as being 1.5 times the store's growth rate, versus 2.5 times for Wal-Mart, thus DLTR is cheaper despite the higher PE, PS, etc.

Note that earnings are approaching rapidly for: TGT DLTR. Check out how much they might move on earningBounce.com.

Stock PE Price/Sales Div Yield (Trailing Annual) Volatility
WMT 15.2 0.5 2.3% 0.13
TGT 16.07 0.6 2.3% 0.16
DLTR 21.13 1.7 N/A 0.15

In the following tables WMT has recently announced, while TGT and DLTR are coming up shortly. The table below shows Quarter on Quarter growth for the companies - you can see that DLTR has growth, while TGT and WMT are rather weak.

Stock EPS Qtr. On Qtr. Growth Rev Qtr. On Qtr. Growth
WMT 5.6% 11/2013 5.1% 8/2013 4.6% 5/2013 11.1% 2/2013 1.5% 11/2013 2.3% 8/2013 1% 5/2013 3.9% 2/2013
TGT -10.4% 8/2013 -26% 5/2013 0.8% 2/2013 17.1% 11/2012 2% 8/2013 -0.9% 5/2013 6.8% 2/2013 3.2% 11/2012
DLTR 9.8% 8/2013 18% 5/2013 25.8% 2/2013 58.1% 11/2012 8.8% 8/2013 8.2% 5/2013 15.4% 2/2013 7.7% 11/2012

The table below shows the Quarter on Quarter growth moving forward for these companies according to analysts. Dollar tree looks like it might have trouble with its EPS growth going forward, but its sales growth looks more solid than its piers. Top line growth can trump EPS growth and some of Dollar Tree's EPS problems are due to difficult compares.

Stock Current Qtr EPS Growth Forecast Next Qtr EPS Growth Forecast Current Qtr Rev Growth Forecast Next Qtr Rev Growth Forecast
WMT 1.8% ( High ) 0% ( Ave. ) -4.2% ( Low ) 14.9% ( High ) 11.4% ( Ave. ) 5.3% ( Low ) 6.7% ( High ) -2.3% ( Ave. ) -89.7% ( Low ) 5.1% ( High ) 3.9% ( Ave. ) 2.1% ( Low )
TGT -27.1% ( High ) -34.4% ( Ave. ) -39.6% ( Low ) 7.2% ( High ) -1% ( Ave. ) -9.2% ( Low ) 4.4% ( High ) 2.6% ( Ave. ) 0.6% ( Low ) 0.7% ( High ) -1.3% ( Ave. ) -3.7% ( Low )
DLTR -7.4% ( High ) -11.8% ( Ave. ) -14.7% ( Low ) 21.4% ( High ) 9.5% ( Ave. ) 4.5% ( Low ) 12.2% ( High ) 11% ( Ave. ) 9.3% ( Low ) 5.5% ( High ) 3.3% ( Ave. ) 2% ( Low )

Source: QoQ Charts Source: QoQ Charts Source: QoQ Charts

Conclusion

I tend to agree with Jim - DLTR is the more likeable of these three retailers, but frankly, I don't like any of them. Wal-Mart has run despite the poor quarter Jim references and DLTR looks a bit weak in the EPS going forward in the out quarters. In addition to that, the stock price has run quite a bit recently. It is likely the case that all of these retailers will rise as we move into the Christmas season due to seasonality and the general bull market, but none of them seem particularly desirable on its own at current prices.

Stocks: TGT, WMT, DLTR