Cramer's Mad Money - BJ's Wholesale Is the Discount King (8/27/09)

Includes: BA, BJ-OLD, BWA, C, DVN, F, ROST
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday August 27.

Who is the King of Retail? Ross Stores (NASDAQ:ROST), BJ's Wholesale (NYSE:BJ-OLD)

Cramer concluded his week-long search for the king of discount with a discussion of Ross Stores, which is increasing same-store sales by 3% while even the best companies are seeing declines in sales and has cut its inventories an impressive 9%. The problem is that Ross' suppliers are also keeping their inventories lean, which means they are no longer desperate to unload their overstock items onto stores like Ross or TJ Maxx at low prices. Given the diversity of its merchandise and its membership club, BJ's Wholesale stands to lose fewer customers as the economy recovers and it still has room to run, since its stock price has increased only 7% since March.

Citigroup (NYSE:C), Boeing (NYSE:BA),

Thursday's decline in stocks provided a rare buying opportunity in a market that has not seen a decline of more than 5% since March 6. Cramer told viewers that dips must be bought. He also recommended buying banking, oil, aerospace and technology stocks, which form the acronym BOAT, and particularly likes Citigroup and Boeing on the news the much-awaited Dreamliner release may happen before the end of the year.

CEO Interview: Larry Nichols, Devon Energy (NYSE:DVN)

Larry Nichols discussed the natural gas sector in general, and stated his belief that Washington is finally waking up to the benefits of natural gas as a bridge fuel. Nichols envisions natural gas filling stations on interstates and the growing popularity of fueling large vehicles with natural gas instead of diesel. He compared the industry to a factory which will spring to life and into full operation as soon as demand rises. Nichols cited the advantages of Devon in particular because the company doesn't hedge natural gas prices, but instead focuses on production growth, which will be more beneficial in the long run.

Borg Warner (NYSE:BWA), Ford (NYSE:F)

The technicals and fundamentals agree in the case of autoparts maker Borg Warner. The stock has fallen below its 50 day moving average, which is a bearish sign. Cramer also thinks the stock is a sell on the conclusion of the government's Cash for Clunkers program which propelled car stocks forward, perhaps too far, too fast. While Cramer ultimately likes Borg Warner and Ford's preferred shares, he thinks the sector needs some time to cool off.


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