CNBC's Jim Kramer on Thursday highlighted two stocks in retail space that investors think have the opportunity to buy at Dip – gap and Ralph Lauren – Despite Wall Street's widespread concern about tariffs and consumer strength.
“There are some of us who feel that way, unless we think the whole economy is about to fall off the cliff, but some of these high quality retailers look cheap at these levels,” he said. “The gap between Ralph Lauren and I'm my favorite right now.”
Cramer admitted that the retail sector was in the “explosion radius” of a trade war that was quickly escalating when President Donald Trump began when he issued sudden tariff hikes on some of his US allies and major trading partners. Consumers are worried about tariffs increasing costs, he said, and less willing to shop. But Kramer suggests that “terrifying tariff governance is temporary,” and in the end the US will either get used to policy, or there will be some sort of solution, and some retail stocks will bounce back.
Beyond Ralph Lauren's strength in the recent quarter, Cramer said he believes the stock is likely to make a comeback more than some of the others in the industry. The brand was able to maintain cultural relevance, he said, and Cramer added that it might be one of the first things that rebounded, as its target customers are wealthier than average.
Cramer was also impressed by Gap's recent quarter, with relatively new CEO Richard Dickson growing four brands, the name Old Navy, Banana Republic and Athleta. He also pointed out that Dixon's apparel company's supply chains are diverse and could be somewhat protected from tariff-induced business issues as he allegedly claimed that 10% of products from China are less than 1% from Canada and Mexico. Dixon said he is confident in the future as the gap was able to capture market share against the backdrop of the industry-wide decline, and almost agreed despite the possibility that Cramer could still face some short-term problems.
“If you buy them and the president ensures that the predictions are basically pain, there's not much you can do in the short term,” he said. “But in the long run, you'll do well – I can't predict when a long-term start is.”
Ralph Lauren and Gap did not immediately respond to requests for comment.
