I am going to add 200 shares of Costco (COST) this morning. I have been playing the early-cycle retailers by owning the discounters. Wal-Mart (WMT) and Costco are the two leaders in this industry, and they focus on providing value to the consumer.
With 50% of their businesses being food and beauty, both companies are somewhat insulated from the weak apparel category. Wal-Mart's numbers yesterday were nothing short of amazing considering the tough environment. I believe Costco's margin problems are behind it (mainly related to gas) and it is poised to recover in earnings and stock price.
After my buy, I will own 1,200 shares of COST, or 2.46% of the fund.
Regards,
Jim Cramer
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DISCLOSURE: At the time of publication, Cramer was long WMT and COST.
Send email to james.cramer@thestreet.com.