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Cramer: The secret sauce behind Five Below's 10% surge

It's no secret retailers are struggling, which is why Jim Cramer thinks the market jumped on Five Below's 1 percent same store sales growth, pushing the stock up over 10 percent on Thursday.

While the "Mad Money" host doesn't put the teen-targeting discount retailer, which reported earnings Wednesday, in the same league as Home Depot or TJX, he believes it has a "terrific long term story" for several reasons.

"First, Five Below has a well defined regional-to-national growth story with a 20/20 plan for 20 percent sales growth and 20 percent net income growth, a plan it beat in 2016 and hopes to continue beating until, well, 2020," Cramer said.

And the national story is an attainable one, according to Cramer. With only 522 stores, Five Below has room to expand in California, a big state for retail, and has been agile in avoiding being cannibalized by other discount chains.

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Cramer also hailed the company's "perfect balance sheet" and crafty pay structure for rent on their stores, done through a one year payback on each $300,000 location.

"'We are a desired tenant,' as they mentioned on the [earnings] call, which brings vibrancy and traffic, two qualities many a mall lacks these days," Cramer said.

Five Below has also been smart about using tactics that work at its best stores and implementing them at underperforming and newer locations, a strategy Cramer believes will benefit the 100 stores the company plans to add in 2017.

The "Mad Money" host also applauded Five Below's ability to reach younger generations.

"They advertise disproportionately on social media, tout their mobile phone reach and have a heavy presence on YouTube," Cramer said. "Suffice it to say they know more than we do about what kids want."

That "fun and experiential" spirit is what helps the discount chain pull in shoppers even as the rest of its sector fails to do so, and what made its 1 percent growth shine in a low-bar environment, Cramer argued.

And if you are worried about the risk of a potential border tax, the company even has a solution for that.

"Even here there's a glimmer of hope, as management believes there would be a low-dollar exemption for imports," Cramer said. "If that's the case, then Five Below will become one of the go-to names for retail in 2017."

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