Cramer: Wal-Mart should be worried about Target

Jim Cramer has some advice for Wal-Mart: Better watch Target than worry about wages.

Cramer made his remarks after Target posted quarterly earnings of $1.50 per share on revenue of $21.75 billion, beating expectations of $1.46 per share on $21.63 billion in revenue.

"Target has a major leg up on with [the Hispanic] demographic, and I think they're going to play on that," Cramer said Wednesday on CNBC's "Squawk on the Street."

The CNBC commentator also said Target CEO Brian Cornell has been able to turn the company around by appealing to consumers setting up households, "He's going after babies [and] wellness [and] basically the consumer who [had] left Target. 'You start a household, you go to Target,' that's what he's saying," Cramer said.

Last week, Wal-Mart announced it plans to increase the starting wages of 500,000 workers to $9 an hour, effective in April.

"I know [Wal-Mart CEO] Doug McMillon is focused on wages, [but] he should be focused on Target," Cramer said.

Read MoreWal-Mart wage raise: Home run or not far enough?

Target's move to expand its online business is another reason of concern for Wal-Mart, Cramer said. "Yesterday, Home Depot said that 40 percent of the people who order online … come to the stores to pick it up, and then they buy things," he said.

Cramer also said Target does not face any additional big capital expenditure cuts in the wake of its decision to pull out of Canada. "This is a company that basically had to starve the U.S. because of Canada. That's over and they can do strategic placement of different brands," he added.