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Cramer: Earnings that shocked rich Wall Street

The strong demand coming from consumers begging for value blows Jim Cramer away. All it takes is a company to offer something cheaper than anyone else, and it is gobbled right up.

"There is an insatiable demand for value in America," the "Mad Money" host said.

McDonald's took the country by storm with its low prices and all-day breakfast menu, and Jack in the Box even complained openly that the low prices have hurt its stock.

"Even after this run, I think the stock of McDonald's makes sense to buy, although only a small amount as you wait for a pullback that will let you add to your position at lower prices," Cramer said.





McDonalds and Dollar Tree
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McDonalds and Dollar Tree

Value was everywhere in retail, too, with both Ross Stores and TJX delivering standout performances. Both offer lower priced, brand-name goods, and the stocks gave a run after they reported excellent quarters. Just as he did with McDonald's, Cramer recommended initiating a position in either one because of their growth prospects, though he won't chase them.

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The discount stores also reiterated the love of value when Dollar General delivered much better than expected same-store sales. But it was the commentary from management that was even better for Cramer, which discussed how they are working hard to find enough locations to meet the demand for more dollar stores.

"I know it seems that the strong job growth we have in this country and the low interest rates should be stimulating so much purchasing power, but the fact is, the average shopper at Dollar General just isn't feeling it," Cramer said.

The company's CEO, Todd Vasos, reiterated on the conference call that the key to its value offering is the concept of a consumer trial. Its customer cannot afford to make mistakes, so it will allow the customer to try a product first before trading up to the larger sizes of a national brand.

That was a value moment in a nutshell for Cramer. "I think that is the reality of both the consumer and the country. We simply don't hear about it much if we are well off," he said.

Given that most people on Wall Street don't have to try something before purchasing it, it explains a bit why Dollar General's earnings took analysts and money managers by surprise.

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