CNBC’s Jim Kramer said Thursday that investors who value continuity should buy the dollar general and risk takers should buy the dollar tree.
“If you want a consistent operator who doesn’t have to go crazy to lose estimates, that’s Dollar General. Even though they’ve lowered the price, I think it’s a long-term strategy to win the hearts of customers,” said ‘Mad Money’ host.
“The Dollar Tree is a high-risk, high-reward turnaround game, where stocks can turn much higher if they stop executions. But if they screw up, you can say goodbye to your profits,” he added.
Kramer says the two companies’ reverse pricing strategies have helped Dollar General to the top. Dollar Tree announced late last year that it had raised the price of most of its products by 1.25 to help offset epidemic-driven costs.
In contrast, Dollar General said in an analyst call on March 17 that the retailer was “leaning” towards its $ 1 product, with plans to set up more in-store displays of items at that price point.
“While Dollar General is pitching this as a move to help their customers, who often struggle to finish, especially if they are on a fixed income, it has the added benefit of enticing dissatisfied Dollar Tree customers who prefer to pay. No. An extra quarter, “Kramer said.
The dollar’s general stock fell 2.13% to $ 222.63 on Thursday. The company reported quarterly earnings in line with forecasts and missed revenue earlier this month. Dollar General also forecast better-than-expected full-year sales and increased its dividend by 31%.
Kramer recently highlighted Dollar General as a dividend stock.
Dollar Tree stock fell 0.11% to $ 160.15 on Thursday, marking a new 52-week high of 2 162.13 at the start of the day. The company missed Wall Street expectations on revenue in its most recent quarterly earnings.
Host said Dollar Tree stock has risen overall in recent months and highlighted changes to the company’s executive board in Dollar Tree as a reason. The retailer named Richard Dreiling, a former dollar general executive, earlier this month as executive chairman of Dollar Tree due to an active investor campaign.
Piper Sandler and Loop Capital Markets have upgraded their position in the dollar tree following the move. “Activist stress can work wonders, especially if it’s a smart worker,” Kramer said.
Sign up now Following every step of the Jim Kramer market for the CNBC Investing Club.