CNBC’s Jim Cramer said Target, like Walmart a day earlier, shouldn’t trade lower as the big box retailer’s quarterly results were “excellent” on Wednesday.
“It’s just a mystery to see Target dropping $ 12″ [or roughly 5%]”, Said Cramer, referring to the decline in the share price at the end of the” Squawk Box “.
“Buying it probably makes the most sense,” he said. “When they come down, Target is a better buy than Walmart, which is owned by my nonprofit foundation. We sold a little more. I just think Target didn’t say anything it deserves to be this deep, ”he added.
Target reported third quarter earnings and sales that exceeded estimates. The big box dealer raised the forward guidance. However, like Walmart on Tuesday, Target investors were worried about margins as the company absorbed some of the higher costs of supply chain disruptions and labor shortages rather than passing them on to consumers.
Cramer said, “Maybe you weren’t leading enough. But Target went up, went up “- with the stock up more than 40% in 2021.” People don’t want to hear you ate something [in terms of higher costs]. You want the customer to eat everything. “
Walmart delivered third quarter results and revenue on Tuesday that exceeded expectations. The company won back grocery buyers as it used its size to deal with tangled supply chains and price pressures. Walmart has raised its profit guidance for the full year. But the stock closed 2.5% on Tuesday and rose slightly to nearly $ 144 on Wednesday. For 2021, the share was close to break-even.
“Walmart is aggressively keeping prices down, so their gross margins are low. But they take an interest in everyone, “said Cramer on Tuesday, calling Walmart an” inflation fighter “and a” stockholder “. Blaming Wall Street’s myopia, he said, “This is the time to take part in the inflationary period.”
On October 26, Cramer announced in his newsletter for the CNBC Investing Club that his charitable foundation had sold 150 Walmart shares for a little over $ 149 each. After the trade, the trust owns 850 shares of Walmart, which is 3.18% of the portfolio.
Disclosure: Cramers Trust owns shares of Walmart.