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Retail investors taking cue from wrong stock

(Click for video linked to a searchable transcript of this Mad Money segment)

"This week we've gotten a slew of retail earnings reports, and many of them have been pretty darned ugly," said Jim Cramer. But there's one in particular that the "Mad Money" host thinks may have led investors astray.

It's the earnings report from Dick's Sporting Goods.

Because Dick's didn't make as much money in the first quarter as the Street expected, investors sold rivals Cabela's and Sportman's Warehouse, assuming the headwinds that held back Dick's were the same for those companies too.

Cramer thinks that's a faulty assumption.

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He says largely Dick's was harmed by its golf business. "They doubled down on golf; the company has a whole second chain of stores called Golf Galaxy, and those stores did terribly," Cramer said.

Also, Cramer noted, hunting was an area of weakness for Dick's, in part because the company decided to stop selling some modern sporting rifles, as a stand against gun violence.

Cramer believes it was these two specific areas of Dick's business that were really the trouble spots. Meanwhile, neither Cabela's nor Sportman's Warehouse have the same degree of exposure to golf and neither company has changed their hunting inventory.

"Therefore, I think that the people who saw earnings from Dick's and then sold the entire sporting goods sector made a big mistake.

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All told, Cramer says, preceding events illustrate how important it is to understand catalysts in any particular business or sector. "If you don't, you risk taking your cue from the wrong company."

That's exactly what Cramer thinks happened this week when Dick's reported. "The market made a mistake. Cabela and Sportman's Warehouse were punished too much as investors wrongly took their cue from Dick's, and I think that down here, both Cabela's and the newly public Sportman's Warehouse are buys."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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